2022 banking and capital markets M&A outlook

A snapshot of banking and capital marketing M&A in 2021

After a tough 2020, banking M&A rebounded with 210 announced transactions as of December 31, 2021—an 89% increase from the prior year’s 111 deals—and an average deal value of $693 million, a healthy rise from 2020’s average $546 million. 2021 also had the largest number of transactions over $500 million in enterprise value since the financial crisis going back to 1998. And 2021 was a banner year for megadeals as banks sought scale, capabilities, business lines, and markets to compete against larger rivals. The five largest announced deals all topped the $5 billion mark.

Investment management (IM) and wealth management (WM) deal volume as of December 31 increased 50% year over year—316 deals versus 210 in 2020. Volume again skewed heavily to asset management and wealth management versus broker-dealer transactions. Compared with 2020’s megadeals, IM/WM transactions were smaller, accretive acquisitions by firms seeking greater scale in current markets or expanding into areas offering higher returns. This focus is reflected in 2021 average deal value, which fell from 2020’s record-setting high of $1.08 billion to a more modest $536 million.

2021 M&A activity—both among fintechs and between banks and fintechs—again trended upward. Deal value for US-based targets as of December 31 increased 12% year over year to $1.16 billion, compared to $1.03 billion in 2020; deal volume rose 31% year over year, from 164 to 216 transactions. Investor groups were responsible for 2021’s largest announced US-based fintech deals, with fintechs offering insurance and health care technology, security technology, financial media and data solutions, and human resources and payroll technology popular targets.

Read the full review of 2021 across banking, fintech, and IM and WM—and see the future of banking M&A—by downloading the banking and capital markets M&A outlook for 2022.

Keeping the banking M&A growth engine humming

B&CM M&A activity in 2021 has outstripped expectations, with volumes we haven’t seen in more than 20 years. There are numerous macroeconomic, strategic, and financial drivers to extend positive momentum into 2022 and keep the M&A growth engine humming.

Strategic buyers in 2022 may be challenged to find acquisitions that are attractive and accretive. It will be compulsory for the buyer’s management team to assess where the company is now, identify which capabilities it lacks in areas of rising demand versus peers and new entrants, and clearly articulate how M&A can enable it to compete and succeed in 2022 and beyond.

If you’d like to talk more about banking M&A activity and how your organization can succeed in 2022, let’s set up a conversation.