The Market Momentum: Why Now? 

After years of quiet deal activity hampered by high interest rates and economic uncertainty, M&A in financial services is experiencing a dramatic resurgence. Deal volumes and values have increased for three consecutive quarters, with October 2024 marking the highest median deal value since December 2021.  

Multiple factors are converging to create what Ed calls “a much-anticipated wave in M&A.” Interest rate expectations have improved. Regulatory approval timeframes are becoming more favorable. Perhaps most significantly, there’s nearly $3 trillion in private equity dry powder—uninvested capital sitting on the sidelines waiting for deals. 

“Private equity is driving an estimated 70-71% of deals in the wealth management sector,” Ed notes. “There’s an unprecedented level of PE participation. These firms are attracted to the predictable revenue streams that financial services offer—especially valuable in a volatile, uncertain world.” 

The specific drivers of M&A in financial services vary by sub-sector. 

• Wholesale banking faces the generational wealth transfer challenge—an enormous shift of assets from baby boomers to younger generations who expect fundamentally different experiences. Organizations must innovate products to provide access to alternatives, tokenization of assets, and deliver everything through digital experiences that resonate with Gen Z and beyond. 

• Regional banking is seeing significant consolidation as smaller players seek the scale required to afford necessary technology investments. The sector is converging around three key trends: acquisitions to obtain talent, mergers to achieve scale for profitability, and divestitures to focus on core areas that justify technology expense. 

• Wealth management continues to attract private equity interest due to its predictable revenue characteristics and growth potential amid the wealth transfer phenomenon. 

Planning for Day One 

The organizations that excel at integration take what Ed calls an “integrated model” approach—planning Day One operations from the very beginning rather than treating integration as an afterthought. 

“Organizations that lead with the integrated model run shorter TSAs (Transaction Services Agreements), realize greater synergies from the deal, and experience much less attrition from both employee and client perspectives,” Ed explains. “It’s less of a chaotic event, which is also critically important for the employees at the acquiring company. They’ve got to do their day jobs while integrating this new acquisition. They’re not getting deal proceeds—they’re just doing their job. A poorly planned, poorly executed integration definitely spikes up attrition.” 

 “There are real challenges when companies are competitors, which they often are,” Ed acknowledges. “There’s hesitance about what goes into the clean room, how much you share on your client base and products, because some deals don’t go through. Regulators are also very focused on antitrust concerns. If these companies are public and trading in the market, regulators worry about gun jumping—portraying a deal as done before regulatory approval is complete.” 

These restrictions create a catch-22: you need deep knowledge of the target to integrate successfully, but competitive and regulatory constraints limit how much you can learn until after you’ve already signed the papers and bought the house. 

“We’re working on a deal now with two competitors, and it’s definitely been hard to push for the level of information ultimately desired until the deal is done and closed,” Ed shares. “You do diligence, but diligence isn’t perfect. Once the deal closes, it gets much easier. But that’s after you’ve committed.” 

What Organizations Need to Know 

For companies contemplating M&A in 2026, Ed emphasizes several critical success factors: 

• Think integration from Day One. Don’t treat integration as something that happens after the deal closes. The best outcomes come from organizations that plan for Day One from the very start of the process. 
• Invest in change management. Cultural integration and employee experience often determine whether you realize deal synergies or lose key talent and clients during transition. 
• Write strong TSAs. These transition service agreements are more than administrative documents—they’re the operational playbook that either enables smooth transition or creates ongoing friction. 
• Plan for the whole organization. Integration isn’t just about technology and operations. The employees at the acquiring company need support too, as they balance regular responsibilities with integration demands. 
• Understand before you buy. While regulatory constraints may limit what you can know pre-close, maximize diligence within those bounds.  

Looking Ahead 

As deal volumes continue their upward trajectory and regulatory environments become more favorable, financial services organizations face a great opportunity. The capital is there. The strategic rationale is clear. The regulatory path is opening. Success now depends on execution—specifically, on whether organizations can navigate the complex human, operational, and technological realities of bringing two entities together. 

 

If you’re preparing for M&A in financial services and want integration expertise from Day One, let’s talk. 

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