The next few months are likely to see a gradual recovery in more traditional M&A transactions aimed at delivering company growth.
The next few months are likely to see a gradual recovery in more traditional M&A transactions aimed at delivering company growth.
According to the latest report into M&A in the European financial services sector by Big Four firm PricewaterhouseCoopers, rapidly growing foreign markets are likely to lead the drive for deals as overseas companies seek to add to their expertise.
Nick Page, partner at PwC, says: ‘The increase in growth-orientated transactions will involve cross-border deals aimed at developing and strengthening a commercial presence in rapidly growing markets, such as Turkey, the Middle East and North Africa.
‘Emerging market businesses may also seek to acquire European expertise, especially in wealth management or investment banking, to use across their home or emerging markets.’
Mid-market activity increased in the second quarter of 2010 with the total value of deals under 1 billion (£0.84 billion) increasing to 6.2 billion. This was up from 5.3 billion in the previous quarter and 3 billion during the same period in 2009.
Fredrik Johansson, director at PwC, says: ‘Mid-market activity, consolidation in insurance, further restructurings in banking and an ongoing rebound in private equity deals have been the beacons of light so far this year and we expect these trends to grow.’
The total value of all European financial services M&A transactions increased to 10.9 billion in the second quarter of 2010 from 7.8 billion in the first.
Overall activity remained at a lower level than for the same period in 2009. Total deal values for the quarter were 46 per cent lower than the 20.3 billion recorded for the second quarter of 2009.
Johansson adds: ‘Further consolidation in stressed areas of European banking, such as Greek private sector banks and UK building societies, is likely. Increased disposal of bank branch networks and non-core activities such as asset management by banks which need to satisfy European Commission state aid conditions are also on the cards.’
The main theme for the quarter in Western Europe was restructuring deals. The UK led the region in domestic deals accounting for 39 per cent by value of the total deal value for Western Europe, followed by Spain, France, Luxembourg and Sweden.
