UK FS M&A fell in 2023, with total deal value hitting a 9-year low

The UK financial services industry reported 273 deals in 2023, representing a 9% fall from the 301 deals recorded in 2022, according to EY’s latest financial services M&A analysis. The total disclosed deal value for the year also fell from £14.9bn in 2022 to £12.1bn in 2023, which is the lowest figure since 2014.

Tom Groom, UK Financial Services Strategy and Transactions Leader at EY, comments: “Despite a promising start to the year, 2023 was characterised by a challenging economic climate and investor caution following the banking crisis in March. In addition, sustained high interest rates, recessionary concerns and growing geopolitical tensions have increased unease in recent months, driving some firms to pause or even reconsider M&A plans. As a result, the UK financial services industry recorded a slowdown in M&A activity in both the number and value of transactions this year.”

Sector specific M&A activity across the UK’s financial markets 

• The number of UK banking deals fell from 71 in 2022 to 54 in 2023, although the total publicly disclosed deal value rose from £4.3bn to £6.7bn year-on-year 
• The number (and size) of deals in the UK wealth and asset management industry fell from 132 in 2022 to 107 in 2023, with deal value more than halving, from £5.6bn to £2.1bn year-on-year 
• The number of UK insurance deals rose from 98 in 2022 to 112 in 2023, however, total deal value still fell significantly from £5.1bn to £3.3bn year-on-year 

The number of non-UK firms acquiring UK targets fell to 54 in 2023 from 65 in 2022, with total value also falling from £7.7bn in 2022 to £6.3bn in 2023. As for UK firms acquiring overseas targets, this fell from 69 deals in 2022 to 66 deals in 2023, with an overall deal value of £1.7bn in 2023, down from £3.2bn in 2022. 

Tom Groom concludes: “The challenging macroeconomic climate impacted M&A activity in 2023. While many of the headwinds are still present this year, interest rates are projected to fall, which should lift market confidence. As a result, we anticipate M&A activity to increase throughout 2024 as firms look at new ways to innovate and grow in this improved economic environment.” 

Notes to editors: 

• Deals include transactions (announced or completed) where the target is in one of the three financial services sectors: banking, insurance, or asset management
• 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 2023 to 31 December 2023
• There is no minimum disclosed value deal threshold