According to our research, M&A deals in the FS sector are no longer focusing on cost cutting. Instead, the emphasis now is on finding opportunities for revenue growth – often through expanding distribution, developing new product lines or by entering new markets. In short, growing through acquisition is the new normal.
Secondly, regulatory reform in some regions – such as the introduction of Solvency II in Europe or the UK plan to force banks to separate their investment and retail arms – will drive major realignments within the global FS sector.
But when the next wave breaks depends on whether enough cost-cutting has restored organizations to a level of readiness to look for growth opportunities, whether they have adequately addressed the external challenges of new regulation and how they must manage an increasingly wary client base that demands more transparency.
– Francesca Short, Partner, KPMG UK