Financial Services M&A: How Buyers and Sellers can Succeed in 2025’s Volatile Marketplace
Key Lessons from A&M’s Global Transaction Advisory Group’s Sell-side Engagements
The landscape for financial services mergers and acquisitions (M&A) in 2025 has been anything but predictable. With geopolitical uncertainties and fluctuating equity markets shaping the financial services sector, M&A processes have faced their fair share of challenges. Yet amidst the volatility, key trends have emerged that highlight what it takes to execute successful transactions in this current climate.
Wealth management and insurance distribution sub-sectors continue to drive deal volume in the space. Drawing from our Global Transaction Advisory Group’s involvement in approximately 20 sell-side financial services processes across the U.S. and Europe in the first half of 2025, this article breaks down the critical lessons learned thus far:
- Buyers are looking for stability and organic growth
- Sellers with a proven M&A history and integration capabilities have been able to demand higher multiples
- Businesses with strong fundamentals and transparent operations will continue to thrive in the second half of 2025
Whether you're a buyer or a seller, these insights will help you better understand the shifting dynamics of the M&A market and prepare for what lies ahead in the latter half of the year.
Reflections on Stability and Growth
Organic Growth Drives Competitive Bidding
Compared to the past few years, a greater emphasis is being placed on the sustainability of topline revenue performance. Buyers are focused on assessing organic growth to understand the target’s ability to drive and sustain growth.
Even during volatile periods this year, like April and early May, businesses that showcased consistent organic growth found themselves in high demand. Companies achieving organic growth beyond referral programs and from a diversified footprint not only received multiple bids, but also commanded higher valuations.
Takeaway: If you're selling, prioritize strategies that highlight sustainable organic growth and present transparent and up-to-date revenue data over making excessive or unsupported EBITDA adjustments. Buyers are more willing to commit when they see a pattern of ongoing success, even in turbulent times.
Transactions Take Time but Remain Competitive
M&A deals are taking longer to finalize in 2025, reflecting buyers’ cautious and increasingly diligent approach to investing in volatile market conditions. Buyers are increasingly focusing on evaluating each target’s exposure to market volatility in conjunction with its historical performance. Businesses with a proven track record of continued growth and disciplined cost management through uncertain environments will remain attractive investment opportunities.
Takeaway: Sellers should prepare for extended timelines but can still anticipate strong buyer interest if their business fundamentals are solid.
Buyer Behavior Shifts
Lofty Multiples Reserved for Proven Platforms
Buyers are demonstrating greater willingness to pay premium multiples, sometimes exceeding 20x EBITDA in the U.S., for platforms with a proven M&A track record. Platforms which adhere to an integration playbook focusing on the centralization of back-office functions have become table stakes. Sellers need to showcase how their acquisition strategy is accretive to organic growth, not just complementary. Businesses that can clearly illustrate successful post-acquisition growth and those which prioritize integration stand out as highly attractive targets.
Takeaway: For sellers with a history of post-acquisition value creation, negotiating higher multiples is achievable. Sellers should have sound financial and operational metrics prepared in advance of any sale process which support their M&A thesis, as anecdotal commentary alone will not appease buyers’ inquiries. Tracking post-transaction results can often times be an onerous undertaking for acquisitive platform and should be a focus area embedded within each acquisitive platform’s integration processes.
Importance of Sector Expertise During Diligence
Sellers this year have increasingly favored buyers with specific industry expertise. The ability to conduct due diligence efficiently and avoid redundant or irrelevant questions has been seen as a major differentiator.
Takeaway: For new entrants into financial services investing, leveraging advisors with deep subject matter expertise within the industry can streamline the diligence process and build trust with sellers.
Hard Lines on Add-Backs
Soft add-backs with limited justification are facing significant scrutiny from buyers. These attempts to artificially inflate adjusted EBITDA are largely being dismissed and, in many cases, result in lost trust.
Takeaway: Stick to accurate, verifiable financial adjustments. Sellers must avoid overcomplicating their narrative with unrealistic add-backs.
Regional Nuances in the M&A Market
Contrast Between U.S. and European Trends
While U.S. markets have seen buyers paying aggressive multiples for proven platforms, Europe is witnessing the rise of a regional-first approach. Political and regulatory momentum toward European market integration is fostering positive sentiment and sparking an increased allocation of capital into the region.
Takeaway: Sellers in Europe must stay abreast of regulatory developments promoting integration, as they could open up new M&A opportunities and strengthen valuations.
Potential for Future M&A Activity in H2 2025
Following a surge of processes launched early in the year, there may be fewer new deals coming to market in the second half of 2025. However, transactions that were shelved or failed to meet seller expectations may resurface as sellers reassess their lessons learned.
Takeaway: Market participants should remain flexible and ready to seize opportunities that may arise when sidelined deals re-enter the market amid stabilized conditions.
Actionable Steps for Buyers and Sellers
- Sellers: Build a compelling growth story. From solid organic growth metrics to transparent revenue data, prove that your business is primed for sustainable success.
- Buyers: Assemble sector-savvy teams capable of conducting prompt and efficient diligence, showcasing your credibility as a partner.
- Both Parties: Stay informed about regional and market-specific factors that could impact the dynamics of M&A in the latter half of the year.
Looking Ahead to Greater Opportunities
The first half of 2025 has been a revealing period for the M&A landscape in the financial services sector. Despite challenges, businesses with strong fundamentals and transparent operations have thrived, drawing competitive interest from buyers.
As we enter the back half of the year, clarity around global markets and economic conditions is expected to further shape the opportunities available. Whether you’re a seller positioning for a premium exit or a buyer seeking transformational growth, understanding these key trends will be critical for success.
For more insights tailored to your goals, contact our team of transaction advisory experts today. Together, we can help you stay ahead of the curve.
