Financial Services: 2025 Deal Activity & 2026 Market Expectations

2025 review

2025 was marked by strategic deal activity focused on scale, capability, and technology, although the market was less buoyant compared to 2024 due to macroeconomic and geopolitical uncertainties. Deal value is expected to be lower than last year, but the last quarter of 2025 saw renewed interest following regulatory reviews and improved market sentiment. Mid-market financial services (FS) businesses remained attractive to investors due to their stable earnings.

Looking at specific subsectors:

• Wealth & IFA activity continued apace with Lee Equity’s investment in Shackleton signaling the entry of another large-scale US PE into the UK market - Amber River and Evelyn Partners are expected to follow suit. Investment in the sector shows no sign of slowing down, with further smaller-scale consolidators rumored to be coming to market, beginning the keenly anticipated consolidation of the consolidators.
• Insurance intermediary buy-and-build strategies remained active, albeit at markedly lower levels than last year, with some estimates claiming deal volume has declined by a third. Specialist intermediaries and MGAs remained the assets of choice, although quality sizeable businesses remain few and far between, outside of competitive auction processes. Some large UK deals of note included the Gallagher/AssuredPartners, Ageas/E-Sure and Aviva/Direct Line deals.
• Banking and Specialty finance activity picked up during the year, buoyed by improving macro-economic tailwinds, with the Shawbrook IPO (hot on the heels of the ThinCats acquisition) and the Klarna IPO being the standout capital markets deals of the year. The TPG / Tide, Lloyds / Curve and Allica / Kriya deals also highlighted the increased appetite of deal makers to back - and bring in-house - disruptors and innovators in the sector.

As 2025 has drawn to a close, market sentiment and macro-economics are expected to keep improving, momentum is expected to accelerate, and the wider FS market outlook for 2026 looks positive.

2026 outlook

After the rise in valuations of the big banks in 2025, the market is optimistic for 2026, though still very conscious of the geo-political uncertainties that lie ahead.

Capital Markets remain challenged, but slightly more optimistic after the Klarna and Shawbrook listings, and M&A pipelines continue to build and be opened. The following themes can be expected to emerge:

• Wealth management buy-and-build: Once more, activity here underpins FS M&A. We expect a lot of consolidators to come to market, especially the lower/mid-level ones. Bolt-on activity should remain buoyant with many consolidators pressed to continue buying assets, but it will be the Evelyn deal that sets the pace, followed by many other names (Verso, 149, MKC, MWA etc.). Meanwhile, other PEHs that successfully exit may re-enter, as Sovereign, Inflexion and CBPE have done. The FCA will continue to increase the scrutiny of the consolidators.
• FinTech rebalancing: The shake out of fintech and neo-banks will continue – expect more take-outs of residual tech and customer bases, like Lloyds/Curve for those who haven’t scaled or demonstrated killer unit economics.
• PE dry powder driving deal flow: PE dry powder (c. $2tn globally) will still need a home. Extended holding periods and the growing number of continuation vehicles will be matched by an urgency to deploy capital at the front end. 
• Corporate activity: Non-core disposals will continue in 2025, as corporates continue to tidy up. We see NatWest/Cushon as an example of this. 
• Professional services: This is perhaps the most intriguing sector, given the activity levels of 2025. Expect activity, rumored or actual, among all firms through to sub-big 4.

Conclusion

After a busy 2025, we think 2026 will be a strong year with the return of the incumbents, and a re-rated sector comfortable with the “change is the new constant” mantra.