Welcome to Mergermarket's Financial Services Forum
The financial services sector saw a rebound in M&A activity through 2017, with deal value leaping 82% year-on-year to reach USD 147.5bn. This leap was fueled by the sector's largest deal, pharmacy group CVS's agreement to pay USD 67.8bn for health insurer Aetna, which accounted for 46% of overall deal value. In 2018, dealmakers and private equity firms are looking to the insurance, fintech, regional bank and asset management subsectors for some of the best M&A opportunities.
While the picture looks rosy for financial services transactions in 2018, challenges remain however. Banks are hoarding cash to meet Basel II Tier 1 capital requirements that could have otherwise been expended on acquisitions, and executives are facing uncertainty stemming from recent legislative reforms made to the Dodd-Frank regulatory framework.
Please join Mergermarket and esteemed panelists for discussions about the opportunities, risks, and overall outlook on financial services dealmaking.
Registration and Breakfast
Keynote Address: Private Equity Ups Ante for Financial Service Opportunities
At the current rate, private equity leveraged buyouts of financial services firms in 2018 is set to match previous years in the current decade with roughly 48 transactions while falling short of the highwater mark of 61, which was reached in 2010. However, 2018’s disclosed valuations are another matter as dealmaking’s torrid pace of USD 3.8bn per quarter is set to exceed the current decade’s record of USD 3.7bn per quarter in 2017. A multitude of reasons are driving pricey acquisitions that range from historic fundraising, sector specific technological innovation, divestures and regulatory reform.
To help explain the specifics of what is driving the M&A market forward is Lovell Minnick Partners, John D. Cochran a Partner and member of LMP’s Management Committee and Investment Committee
- How will recent legislative changes to Dodd-Frank change the competitive landscape throughout the financial services sector?
- How are incumbents embracing and competing with fintech and blockchain/cryptocurrency companies?
- Outlook and perspective on private equity activity within the financial services industry.
Execs Break the Bank for Financial Services Opportunities
As several factors ramp up dealmaking among financial services firms this year, arguably the most consequential is shareholders' demands for diversifying revenue streams. Frustration with a low-rate environment and uneasiness from the disruption of fintech entrants, investors are pushing executives to broaden the income base with acquisitions of new business lines, a trend most prominent in the asset management business. Moreover, recent legislative changes to the Dodd-Frank law have regional bank executives and investors poised for more dealmaking now that regulatory restraints have loosened, which means some deals that were sidelined or deemed unviable will now be pursued.
Delegates will have an opportunity to hear panelists discuss and debate M&A trends within the asset management industry, regulatory reform, regional bank consolidation, and deal financing trends.
- How is the digitization of the asset management industry shaping M&A? What other trends and opportunities are influencing asset management M&A?
- How are asset managers responding to revenue pressure? What firms are they looking to partner with in order to scale and grow the bottom line?
- Is the valuation gap between institutions and fintech firms still too wide for acquisitions as opposed to JVs? What are the latest opportunities and risks behind fintech acquisitions?
- When will institutions finally utilize financial data for opportunistic ends? Will this trigger a buying frenzy?
- With tax rates down, tier 1 capital up, and banks retaining stronger stock currencies and book value, will the market see an uptick in all-stock offerings? What are the implications?
- Will bidders accept more aggressive terms and valuations for top-notch companies?
- How is shareholder activism shaping financial services M&A? How are boards fighting back?
- What are the opportunities and trends behind wealth management acquisitions?
Coffee Networking Break
LBO Shops Deploy Firepower Throughout Finserv Sector
The number of PE-led financial service acquisitions has held steady this year relative to activity going back to 2010. However, valuation jumped to almost USD 15bn among disclosed transactions, blowing past second-placed 2013, which recorded USD 10.5bn – broadly a reflection of record fundraising and dry powder deployment. Much like 2016, PE firms targeted various insurance firms for their predictable cash flows and low costs of capital. The largest LBO of 2017, KKR's purchase of USI Holdings Corp for USD 4.3bn highlighted this trend and another in which sponsor-to-sponsor transactions dominated the LBO dealmaking landscape. Will these trends continue for the remainder of 2018 and into 2019?
Panelists will discuss private equity dealmaking opportunities and trends within the financial services industry.
- What is the outlook for buyouts of insurance companies, financial advisors and asset management firms – apparent favorites of the PE industry?
- How will exit conditions endure over next several months? Is the role of an "exit committee" truly instilling a more objective and disciplined approach to such decisions?
- How are PE firms competing with strategic buyers given the latter's cost of capital and cash advantage?
- What kind of "bolt-on" strategies will LBO shops pursue within the financial service sector, i.e. fintech addons for small scale bank platforms?
Conclusion of Event
*Agenda subject to change