2025 M&A trends in the financial services sector

Mergers and acquisitions within the financial services (FS) sector have long served as a pulse check for broader economic trends. The last six months have revealed nuanced dynamics fuelled by fluctuating market conditions, sector-specific opportunities, and emerging challenges. RSM specialists Vincenzo Braiotta, Partner – Deal Advisory at RSM in Switzerland; James Zuurbier, Corporate Finance Director at RSM in the UK; and Hersh Shah, Partner - Transaction Advisory Services & Financial Services Leader at RSM in the US offer their expert insights on the current M&A trends dominating the financial services landscape.

Recent M&A activity in financial services

Across the financial services sector, M&A deals have mirrored global uncertainty but maintained steady momentum. According to Zuurbier, "The activity in the financial services sector is broadly aligned with what's happening across other sectors. While 2025 began with a sense of optimism, evolving geopolitical and economic factors have tapered some of that enthusiasm." Delays have become increasingly common, though there has been no significant collapse in deal pipelines.

The wealth management and insurance brokerage sectors, in particular, have seen consistent activity. However, opportunities in the specialty finance segment remain constrained, stifled by higher interest rates and an ever-changing regulatory environment.

Meanwhile, Braiotta highlighted the Swiss scene, identifying Switzerland as a hub of deal-making activity and organic growth opportunities, with significant wealth management and corporate banking groundwork laid post-Credit Suisse's collapse. "In the asset management sector, smaller privately held firms managing between €0.5 billion and €3 billion in assets have become attractive acquisition targets, as consolidation accelerates in response to increasing regulatory pressure,” he observed.

Key markets driving activity

Some sectors continue to perform exceptionally well. Wealth management and independent financial adviser (IFA) consolidation remains strong, though dealmakers note this may proceed at a slower clip compared to previous years. Insurance broker consolidation also persists, albeit at a moderated pace.

Shah pointed to asset management as the standout driver globally, with large-scale transactions dominating the landscape. “The major deal activity remains concentrated in asset management, with deals exceeding $20 billion in assets under management (AUM) attracting significant investor interest,” he said. Consolidation opportunities within the banking sector also remain robust, with banks seeking strategic synergies amid heightened competition.

Challenges and hindrances in the market

Geopolitical tensions, interest rate uncertainty, and looming trade adjustments are all weighing heavily on the FS M&A environment. Shah noted that tariffs have an indirect but significant influence. "While financial services doesn't face direct tariff impacts, the product-level businesses they finance are affected, leading to ripple effects," he said. For certain regions, like Germany, opportunity abounds as the market attracts activity for strategic buying at competitive valuations. However, less resilient economies are contending with slower workflows as investors wait for macro conditions to stabilise.

Regulatory burdens also continue to shape deal dynamics, particularly for smaller asset managers. On the compliance side, buyers are often seeking to acquire businesses that already house appropriate licenses, circumventing drawn-out approval processes.

The role of private equity and private credit

Private equity’s influence in the FS M&A arena remains substantial but increasingly nuanced. The amount of dry powder is very high, but has not changed notably since 2024, notes Zuurbier. “There is still a huge amount to invest, but there is a slight turning of the tide perhaps, or at least a flattening off in terms of levels of dry powder.” With dry powder still high regardless, the appetite for deals is constrained primarily by valuation disparities. "Private equity firms are reluctant to sell presently because current multiples often won’t reflect their purchase valuations or exit ambitions," observed Braiotta.

Private credit, on the other hand, has emerged as both a challenge and an opportunity. Companies now rely more on private credit vehicles for deal financing as opposed to traditional bank funding. The increasingly competitive environment for deal financing has brought compressed spreads and looser covenants, though investor caution is keeping private credit activity below its full potential due to sustained high interest rates.

Continuation funds have also become a visible trend. Zuurbier notes their emergence as a mechanism to offer liquidity without outright sales of portfolio companies, reflecting a dynamic adaptation by investors in a challenging financial environment.

Major transactions shaping the landscape

Large-scale acquisitions have a ripple effect on market sentiment, influencing deal confidence across the board. Switzerland’s dramatic reshaping, led by UBS’s takeover of Credit Suisse, illustrated how major moves can shift equilibrium in competitive landscapes. “Mid-sized and second-tier banks are stepping up to fill the void left by Credit Suisse, capturing high-value wealth management and corporate clients and portfolio transactions,” explained Braiotta.

Similarly, recent transactions like Capital One’s acquisition of Discover Bank, though in America, have illustrated the enduring appetite for competitive strengthening and market expansion. The impact of such transactions on market confidence should not be underestimated as they have a dominant role in setting valuation benchmarks for mid-market players.

AI’s growing but limited influence in financial services

Artificial intelligence has yet to fundamentally alter the M&A landscape in financial services. While there is much discussion about its potential, tangible applications remain niche. "Although some activity is visible in areas like portfolio management and customer-facing technologies, AI’s role as a serious game-changer is more aspirational than actual, at least for now," noted Zuurbier.

Braiotta echoed this sentiment, pointing to regulatory and structural hurdles to AI adoption, particularly within compliance-heavy environments like banking. That said, leading-edge firms have begun experimenting, with some achieving traction in AI-driven asset management platforms.

Projections for the next six months

Looking ahead, there’s cautious optimism about the momentum of deal activity in financial services. Shah notes that "Investors and businesses are demonstrating a readiness to re-engage with opportunities despite prevailing uncertainties." Asset management and corporate banking are expected to lead the pack, with specialty finance seeing selective high-value consolidation.

Zuurbier places his projection between cautious and optimistic, noting the mixed signals in current sentiment. Fundamentally, outside of the uncertainty presented by U.S. tariffs, deal drivers remain similar to 2024, firms are likely to be far more selective in their acquisitions, and PE will continue to play a large role. Regulatory loosening in the U.S. coupled with private equity and credit capital will remain critical enablers in the short term. Braiotta also suggested that smaller asset managers facing tighter regulations may drive consolidation waves over the months to come.

From navigating geopolitical challenges to leveraging dynamic private equity and credit structures, the financial services M&A landscape is both precarious and promising. A resilient and strategic approach, bolstered by innovation, will likely define the coming period for dealmakers worldwide.