Moderating valuations, stable credit markets, and enticing regulatory conditions should support M&A across the financial services sector in 2026, advisors told this news service.

Deal momentum accelerated sharply in the second half of 2025, driven by big ticket finance transactions and renewed sponsor activity, according to Mergermarket data.

“We’re seeing deal volumes approach the hockey-stick levels of 2020–2021,” said Nadia Orawski, US deal advisory and strategy banking leader at KPMG.

The finance subsector led the rebound with USD 109.5bn worth of 2H25 deals from USD 58bn in 2H24, notably including the USD 27.4bn Air Lease buyout and Fifth Third Bancorp’s pending USD 10.6bn acquisition of Comerica.

“I’ve never seen it be this active in my career,” said Khelan Dattani, a managing director at Capstone Partners who has been an advisor for more than two decades. Capstone and its parent Huntington Bancshares have multiple mandates underway and an unusually heavy pitch calendar, he added.

Finance deal activity in 2025 was driven by large, complex financings and sponsor appetite for scalable platforms, Dattani noted.

Sponsor-led buyouts in financial services hit a record USD 47bn in 2025, a 62% jump from 2024 powered by the strongest second half ever recorded. Exits came in at USD 21.6bn, down 13% year over year.

Insurance

Insurance deal value contracted 44% year‑over‑year in 2H25 to USD 25.4bn, though it still produced two of the year’s 10 largest deals in the sector, including Brown & Brown’s USD 9.8bn purchase of Accession Risk Management.

Insurance distribution valuations remain “robust,” Dattani added.

Carrier‑level consolidation, on the other hand, has been “too quiet,” especially in property and casualty, he said. He sees a greenfield deal opportunity for roll‑ups of sub‑USD 1bn premium underwriters.

“On the P&C side, I feel like there are opportunities to roll up smaller carriers that nobody’s doing,” he said.

Andrew Cochran, a managing director at Houlihan Lokey, said traditional deal value metrics understate the true strength of the 2025 insurance M&A market.

The landscape is bifurcated as “premier companies are commanding premium valuations, while less distinguished firms are receiving much more scrutiny by investors,” Cochran said.

Managing general agents remain the hottest corner of the sector as they evolve into technology‑driven platforms with strong talent and superior growth profiles, Cochran said. Neptune, the flood-focused MGA went public, and data-enabled home insurance platform Bamboo sold to CVC at more than 21x earnings, he noted.

Insurance players that could follow Neptune to IPO include Hub, Acrisure, CRC, and Howden, according to Mergermarket intelligence and advisor commentary. Inszone Insurance, backed by BHMS Capital and Lightyear, may approach an exit given its lengthy PE hold time.

High-quality MGA platforms with scale, diversification, a strong team and advanced technology are trading in the high teens, “often 17 to 19 times EBITDA or more,” Cochran said.

Sponsor appetite shows no sign of slowing, with credit markets offering unusually high leverage and attractive terms, he added. Large brokers are digesting recent billion‑dollar deals, but Cochran expects additional upscale transactions in 2026.

RIAs

Despite market volatility, the pace of RIA consolidation continues unabated, said Corey Kupfer, a veteran M&A attorney in the space.

“Interest rates are higher—doesn’t matter. Geopolitics—doesn’t matter. Equity markets go down—that doesn’t matter,” Kupfer said.

Year-end 2024 was a “frenetic rush,” with six closings on 31 December 2024 alone as the market sought tax clarity following the presidential election. Kupfer expected an early‑2025 slowdown, but it didn’t happen, he said.

Part of the resilience is due to countercyclical buyer behavior, as market downturns attract opportunistic buyers who use the dips as entry points, Kupfer said.

Other catalysts for the robust wealth management M&A market are expanding sponsor interest, and new entrants from the UK and fintech spheres, the attorney said.

He expects aggregators themselves to begin consolidating and eventually tap the IPO markets once sponsors reach the limits of private market backing, he said.

Dattani, of Capstone, warned that wealth management valuations have reached unsustainable levels as even smaller players are asking for the 20x EBITDA valuations typical of the largest advisories, he said.

He anticipates a correction tied to what he views as overextended equity markets, which Dattani believes are “in bubble territory.”

Among wealth management deals on the horizon, AlTi Global announced a review of strategic options and has attracted interest from several potential buyers.

Banks

Bank M&A is having one of its busiest deal seasons in years, and it’s already showing on Commerce Street’s revenue projections, said Dory Wiley, the investment bank’s CEO.

“We budgeted a little bit higher revenues this year for M&A, and it already looks like we’re going to blow through that,” Wiley said.

A “green light” in the regulatory environment under the Trump Administration lubed the gears for major deals, including the Fifth Third-Comerica agreement and Pinnacle Financial’s acquisition of Synovus.

Pent-up demand from several down years has not led to a mindless frenzy, Wiley said. Buyers are enforcing steep discipline, requiring one‑ to two‑year tangible book value earnbacks and limiting pricing to roughly 1.5x TBV — far below the 2x levels seen in past cycles, he said. That tendency is pushing some sellers toward mergers with stronger acquirers whose stock they can “ride up” on valuation after the deal, Wiley said.

Supply constraints are mounting, particularly in California and the Northwest, where bank counts have thinned, he said. Meanwhile, demographic shifts toward Texas, the South, and Florida are reshaping the map of desirable markets, Wiley said.

Wiley expects regionals like Zions to reenter dealmaking.

“You can’t just be stagnant or you’re going to wind up being part of a deal” as a seller, he said.