Why investors see opportunity in 2024’s financial market

Looming elections are likely to be a barrier to M&A deal activity beyond September. But deal activity across non-banking areas of the sector remains robust, and attendees at RBC Capital Markets’ Financial Institutions Conference suggest a positive sentiment. Vinnie Badinehal, Head of Financial Institutions, and Jason Braunstein, Head of Financial Institutions M&A, assess the sector’s progress.

By Vito Sperduto, Larry Grafstein, Venkat (Vinnie) Badenihal & Jason Braunstein
Published April 5, 2024 | 22 min read

Key Points

  • Record attendance at RBC Capital Markets’ Financial Institutions conference highlights the opportunities for investors during a time of volatility.
  • Dealmakers in the sector are likely to avoid encroaching on the U.S. election period in case of delay.
  • Robust activity and major deals are set to continue in the insurance, wealth, and alternative asset spaces.
  • Fintech M&A has not reached the predicted levels, as financial institutions have been able to achieve tech advances in-house.

View audio transcript


What was the mood of delegates at the recent conference?

Vito Sperduto: We had over 140 companies and over 900 attendees at this year’s event, which are records. This could be an indicator of the types of activities our clients are anticipating.

Vinnie Badinehal: The overall dialogue that we had with our clients, and that clients had with investors, was probably more robust, engaging, and interactive than we’ve ever seen. This is why we tend to be very optimistic about the years to come for the financial services sector.

Jason Braunstein: The other reason investors are showing up in greater numbers is this is when you make money in the sector. The financial services business is typically a ‘Steady Eddy’ kind of business: you can’t make outsize returns unless there’s a big catalyst. When you have turmoil, ups and downs, uncertainties, this is the time when you can make a real return.

‘Investors are showing up in greater numbers because this is when you make money in the sector’

Jason Braunstein, Head of Financial Institutions M&A

What impact will the U.S. election have on M&A in the sector?

Sperduto: We expect the first half of this year to be active. We’ve counseled clients that September and October of this year, we’ll have a lot of noise in the system, given the election, and as a result, it’s unlikely that folks are going to want to be in the market at that point.

Braunstein: What’s on clients’ minds, more than rates, is the political environment. If you go across an election, and there’s a new administration, and your deal gets extended by five months, that’s a disaster.

‘If you go across an election and your deal gets extended by five months, that’s a disaster’

Jason Braunstein, Head of Financial Institutions M&A

What are the trends in the sector in areas other than banking?

Badinehal: In insurance, we see a continued trend of some of the live companies moving to more of an asset-light model. You’ll see the continued role of PE players trying to establish subsidiaries, ownership, or support of life insurance companies as a provider of funding for assets.

On insurance brokers, we see continued activity and probably moderation of valuation. We’ve seen the biggest deals that the sector has ever seen, with Aon acquiring NFP, and CD&R and Stone Point acquiring Truist.

In the wealth space, we saw CI Wealth Management and others being able to get new investment in terms of new players. We also saw Stone Point and CD&R acquiring Focus Financial.

There has been huge growth in multiples in the alternative asset management space, and traditional asset management companies diversifying, with BlackRock pursuing the acquisition of GIP. So we’ve actually had one of our busier years in M&A across the financial services landscape, and we’re seeing these trends continue in 2024.

‘You’ll see the continued role of PE players trying to establish subsidiaries, ownership, or support of life insurance companies’

Vinnie Badinehal, Head of Financial Institutions

Are financial institutions maintaining their edge in tech capabilities?

Sperduto: If we go back five years plus, there was a very significant conversation with clients about acquiring technology, building a resilience around that element of the business, and certainly using it to supplement their fee businesses as costs are coming down. Banks have maybe struggled to integrate fintech businesses.

Badinehal: We’ve seen some of them develop capabilities or buy smaller platforms, where the capital investment was not as high. In terms of the larger players, we have not seen as much as we would have envisioned five years ago, but the interest in expanding on capabilities and being more competitive remains.

Braunstein: The technological advances are massive throughout the sector, but they’re taking place more and more within the banks than outside. Our financial institutions in general have done a good job in housing the technology advances, rather than waiting for a disruptor to get there first.

Badinehal: Five years ago, we also thought a lot of the traditional tech companies would move into financial services. They’re certainly trying to play a meaningful role, but they’re also being cautious on how far they go, so as not to attract the attention of the regulators.

‘Financial institutions have done a good job in housing the technology advances, rather than waiting for a disruptor to get there first’

Jason Braunstein, Head of Financial Institutions M&A

Our Experts

Vito Sperduto
Vito Sperduto
Global Head, Mergers & Acquisitions,
Larry Grafstein
Larry Grafstein
Deputy Chairman, Global Investment Banking
Venkat (Vinnie) Badenihal
Venkat (Vinnie) Badenihal
Head of Financial Institutions
Jason Braunstein
Jason Braunstein
Head of Financial Institutions M&A

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