By Rowan Bamford, President, Liberty GTS
In certain markets, activity has already started to pick up. In the last week of November 2024, four takeover deals worth £5.3bn were announced in the UK. However, the full impact of the UK Budget is now starting to take effect and could impact the transactions market this year.
US to see uptick in M&A transactions
Following the election of Donald Trump, the US is being seen as the beacon of M&A activity this year. Due to Trump’s pro-business stance, there was a jump in stock prices for US investment banks. It is likely that the US will take the lead in the growth of the transactions market which should flow through to Europe and Asia within three to six months.
However, the mainland European market remains challenging due to political uncertainty, particularly in France and Germany. European transactions are very reliant on cross-border activity and any sense of turbulence will not provide investors with the confidence they require.
As with any economic downturn, large deals were rarely witnessed in 2024, but the mid-market and lower mid-market continued to be active, and the number of deals is likely to grow during this year. It is also anticipated that an uptick in activity in the US will lead to an increase in larger deals.
M&A market growth likely to be patchy
This is the first soft market for M&A insurance. Rates were fairly stable between 2010 and 2020 with the market taking off in 2021 as transactions peaked, however, rates have since fallen back. The W&I market has no experience of this rate of decline, but notifications remain at 2020 levels, just not quite at the dizzy heights experienced during the peak.
The W&I market in Europe and the US is sophisticated and saturated. However, there are significant opportunities for growth across Asia due to its potential size. India is currently being touted as the next hot market. However, as with any new insurance market, it remains untested. I remain cautiously optimistic that we will see growth for M&A insurance in 2025, after a few challenging years. However, I believe it will be patchy and geographically diverse. M&A insurers will need to choose their markets and their deals carefully to ensure solid returns and protect their claims ratios.
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