The UK financial services industry announced 252 deals in 2021, up from 134 in 2020, representing the highest volume of deals in five years, according to EY’s latest M&A analysis. The total disclosed deal value year on year however fell from £31.2bn 2020 to £25.8bn in 2021.
Sector specific M&A activity breakdown:
- The number of insurance deals rose from 45 in 2020 to 81 in 2021, but total deal value fell from £18.4bn to £9.0bn
- In the wealth and asset management industry, the number of deals more than doubled from 45 in 2020 to 113 in 2021, with the total deal value also seeing a strong increase from £1.2bn to £10.5bn
- There were 58 banking sector deals in 2021, up from the 44 in 2020, however, total deal value fell from £11.6bn to £6.4bn year on year
- The largest UK financial services deal in 2021 was in the insurance sector, valued at £2.9bn
Tom Groom, UK Financial Services Strategy and Transactions Leader at EY, comments:
“Given the difficult economic and health backdrop and a pandemic-linked lull in 2020, 2021 was a strong year for UK financial services M&A activity. In fact, it was the most active year for financial services M&A since 2016 in terms of deal numbers. There were 118 more deals announced during 2021 compared to 2020, likely aided by strong economic recovery particularly in the first half of 2021, and the positive sentiment around the large-scale vaccine and booster roll-out.”
The number of non-UK firms acquiring UK targets was up from 33 in 2020 to 63 in 2021, but total value decreased from £19.6bn in 2020 to £11.4bn in 2021. As for UK firms acquiring overseas targets, this rose from 41 in 2020 to 52 in 2021, with deal value increasing from £3.2bn to £6.0bn.
Tom Groom continues: “While the pandemic unfortunately remains far from being consigned to the history books, the pace and effectiveness of the vaccine and booster programme meant some semblance of normality returned in 2021. The economy rebounded quicker than expected last year and as a result, M&A activity saw a strong uptick, with many financial services firms completing deals, and consolidation returning as one of the answers to business model, growth and cost challenges.
“Further M&A, particularly inbound activity, is expected to continue into 2022, propelled by the UK's continued strength in financial services and its FinTech growth trajectory. While headwinds including the emergence of new COVID variants such as Omicron could negatively impact confidence - and with it deal-making - such challenges could equally provide the impetus for consolidation. So, on balance, we anticipate this year being another busy and dynamic time for the market.”
Notes to editors:
- Deals include transactions (announced or completed) where the target is in one of the three financial services sectors. Equity investments are included, but joint ventures are not
- Deals where less than 20% (disclosed) of the company was acquired have been excluded from this analysis
- The total number of deals relate to where there was either a UK target or UK acquirer
- Data range: 1 January to 31 December 2021
- There is no minimum disclosed value deal threshold.