A new report issued by PwC reveals that financial services mergers & acquisitions (M&A) will face both uncertainty and opportunities in 2013 due to several factors including increased regulatory costs, depressed organic growth, and the greater availability of attractive financing.
However, while 2012 proved to be a challenging year for announced deal activity in the financial services sector, there is some cause for optimism in 2013.
PwC said U.S. banking, insurance, asset management, and other financial services deal activity in 2012 differed very little year over year from 2011. Announced transactions rose from 756 in 2011 to 768 in 2012, but deal value fell from $72.1 billion in 2011 to $62.4 billion in 2012. Deal volume is still down from pre-financial crisis levels.
“The past year has seen a stabilization in many of the challenges facing financial firms after the financial crisis of 2007-2008 such as uncertainty in asset quality and growth prospects, regulatory approvals, and integration of operations, as well as the large number of new regulations coming online,” said John Marra, PwC transaction servicesfinancial services leader. “While obstacles remain, we expect these trends to continue to improve in 2013.”
According to the report:
Grounds for 2013 Optimism
“M&A desire remains high among buyers, and 2012 featured a significant amount of pre-deal activity. However, valuation gaps remain, and differences between buyer and seller perception of future profitability will continue to present a challenge,” Marra remarked. “At the same time, ongoing divestiture of non-core assets by major European institutions will drive deal activity into 2013.”
Additional Highlights include: (click-on link to report below)
To download the full report click here.