- UK financial services announced a seven-year high of 136 deals in the first half of 2022
- Total disclosed deal value H1 2022 was £8.6bn
The UK financial services industry announced a seven-year high of 136 deals in the first half of 2022, up from 118 deals in the same period in 2021, according to EY’s latest financial services M&A analysis. The total disclosed deal value for the period, however, fell from £10.5bn in the first half of 2021 to £8.6bn in the first half of 2022, and activity was slower in Q2 2022 than in the first quarter, before the onset of the war in Ukraine.
Sector specific M&A activity breakdown:
- The number of UK insurance deals rose from 32 in H1 2021 to 48 in H1 2022, with the total publicly disclosed deal value increasing from £1.4bn to £2.4bn year-on-year (yoy)
- In the UK banking sector, there were 34 deals in H1 2022, up from 25 in H1 2021, and total deal value increased from £3.0bn to £3.6bn yoy
- However, in the UK wealth and asset management industry, the number of deals fell from 61 in H1 2021 to 54 in H1 2022, with overall publicly disclosed deal value decreasing from £6.1bn to £2.6bn yoy
Tom Groom, UK Financial Services Strategy and Transactions Leader at EY, comments: “UK M&A activity had a strong start to the year as expectations that the economy would bounce back to pre-pandemic levels were high. However, although we are looking at a seven-year H1 deal volume peak, activity fell between the first two quarters of this year as geopolitical tensions began to impact the market, and have led to rising inflation and supply issues.
“Looking at deal activity at a more granular market level, we can see a growing price expectations gap between sellers and buyers, with the latter pricing in more risk and reacting to higher funding costs. This could mean there are fewer opportunities brought to market in the short-term, although the signs show that the market currently remains buoyant and set for steady activity to continue.”
While there were 33 non-UK firms acquiring UK targets in the first half of 2022, compared to 31 in the same period in 2021, total value halved from £4.2bn in 2021 to £2.1bn in 2022. As for UK firms acquiring overseas targets, there were 28 deals in 2022, compared to 27 in 2021, again with a lower overall deal value of £1.5bn in 2022, down from £2.4bn in 2021.
Tom Groom concludes: “M&A activity continues to provide an answer for many firms looking for growth, development, innovation, and cost synergies. While geopolitical tensions and the high inflationary environment may make financial services deal-making more challenging in the short term, these factors could well drive out further acquisition and consolidation opportunities longer term.”
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 2022 to 30 June 2022
- There is no minimum disclosed value deal threshold.