After an uncertain start to the year, the financial services M&A market is showing renewed strength. Despite a 20-year low in deal activity earlier in the year, deal volume surged in Q2 and Q3, supported by easing regulatory signals, pent-up demand, and a wave of mega-deals ($10B+), such as Global Payments acquisition of Worldpay while simultaneously divesting its Issuer Solutions unit to FIS.
Yet as deal flow accelerates, financial services organizations face a stark truth: execution challenges have never been more challenging. From data quality concerns cultural friction, from resource constraints to benefits harmonization, today's environment demands a more sophisticated and disciplined approach to deal readiness and integration.
In this article, we share key trends from our Financial Services M&A Roundtable, highlight insights from leaders across the sector, and provide practical recommendations to help organizations navigate the next phase of M&A with confidence.
Why is the financial services M&A market outperforming?
After a turbulent first quarter characterized by regulatory uncertainty, tariff concerns, and valuation disagreements, financial services deal activity has regained momentum. Several factors contributed to the turnaround:
- Easing regulatory uncertainty: Early mixed signals from U.S. antitrust authorities created hesitation. But subsequent approvals, including high-profile deals such as Capital One–Discover, signaled a more balanced approach to enforcement, prompting executives to restart paused transactions
- Pent-up demand after a stalled Q1: Many deals under consideration in early 2025 were released into the market in Q2 and Q3, driving a sharp rise in activity
- Mega deal domination: Mega deals, defined as deals valued over $10 billion, are increasingly shaping the financial services landscape. For example, Fifth Third's merger with Comerica announced in October was valued at $10.9 billion. These transactions often redefine competitive dynamics, create new market leaders, and accelerate innovation
- Pressure on regional banks: Increased loan losses, capital constraints, and regulatory requirements are reinforcing the need for scale, resulting in accelerated consolidation among regional and mid-tier banks
The result: Financial services M&A not only recovered but outpaced the broader M&A market, despite a challenging start to the year.
What will financial services M&A look like over the next two years?
HR leaders from our Financial Services Roundtable have a bullish outlook:
- 75% of financial services (FS) leaders expect an increase in deal flow over the next two years; 44% expect a significant increase
- Domestic acquisitions are the dominant focus, as FS companies seek scale to increase operational efficiency, access new customer segments and expand service offerings
- Roundtable members expect fewer divestitures and cross-border deals than peers in other industries. This suggests financial services organizations are seeking growth within existing markets.
Resource constraints are emerging as a critical risk
While financial services leaders were less concerned about internal resource availability earlier in the year, the surge in deal activity has changed the picture. In our roundtable, two-thirds of participants indicated limited internal resources as a growing challenge. This reflects a broader trend: as deal activity accelerates, internal teams are stretched thin, especially in functions that support both day-to-day operations and deal execution.
The organizations navigating this most effectively are proactively:
- Building scalable integration playbooks and tools
- Establishing repeatable governance routines across deals
- Leveraging external partners to supplement bandwidth
- Using GenAI and automation to streamline workflow where appropriate
Why is benefits harmonization one of the biggest pain points in financial services deals?
With significant differences and complexity, getting benefits right in an M&A context is hard. In our experience, the biggest challenges include:
- Access to timely, detailed and accurate data
- Compliance with requirements in the sale and purchase agreement
- Balancing cost synergies, operational efficiencies and employee impact
- Addressing benefits continuity issues
- Ensuring changes are culturally and financially sustainable
While FS leaders expect fewer cross-border deals in the short run, global deals are especially difficult given the challenges such as:
- Coordination of hundreds of stakeholders and third parties across many countries
- Employee communication and coordination with Works Councils
- Differences in legislative requirements and norms across multiple countries
Organizations that handle this well tend to invest early in:
- Global coordination to ensure consistency, rapid decision-making, and milestone achievement
- Activation and direct communication with local subject experts on both sides of the deal
- Comprehensive benefits side-by-side analyses and recommendations from benefits experts in each country
- Experienced decision-makers that focus on appropriate analyses and benchmarking needed to achieve deal objectives
What strategies are leading financial services organizations using to overcome integration challenges?
Across the roundtable discussion, several practices emerged consistently among the most successful deal teams:
- Prepare before a deal lands: Pre-built templates, tools, project plans, governance models, and HR M&A playbooks drastically reduce the chaos of compressed deal timelines. M&A training and deal simulation exercises help to align stakeholders
- Treat data readiness as a continuous capability, not a deal-by-deal effort: This includes global HR data governance, inventories, data request checklists, periodic benchmarking, harmonized HR programs and processes, and mobilization of local HR SMEs
- Establish highly effective HR M&A PMO: M&A projects move quickly, involve many stakeholders, and sometimes overlapping work efforts. Effective communication with the executive team, the integration management office (IMO), and within HR allows the HR M&A teams to work more efficiently, avoiding missteps and addressing stakeholders' concerns, and ensure successful deal outcomes.
- Mobilize sufficient (and the right) resources: Speed and experience matter when it comes to successful deal execution. Decisions need to be made quickly and thoughtfully. It helps to know how your organization and peers handle various situations to avoid pitfalls.
If your organization would benefit from our support getting ready for your next M&A deal, our team would be glad to help.
