Financial institutions M&A: Sector trends - July 2020
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Brokers/Corporate Finance

Financial Institutions M&A sector trends: Brokers/corporate finance — H1 2020 and outlook for H2 2020

Thinning of the herd continues as "traditional" brokers struggle to remain profitable amidst encroachment by Bulge Bracket and disruption by fintech.



Current market

  • Consistent; active

We are seeing

  • Brokers expand to weather the COVID-19 climate:
    • Inorganic strategies (e.g., Interactive Investor's acquisition of The Share Centre)
    • Organic strategies (e.g., Houlihan Lokey's launch of its European equities advisory business)
  • Stiff competition for "traditional" brokers from online and commission-free trading offerings:
    • Expansion of foreign platforms into the UK (e.g., Robinhood)
    • New UK startups (e.g., Freetrade)

Key drivers/challenges

  • High buyer / investor appetite:
    • Trade consolidators seeking to galvanise business models (e.g., flatex's acquisition of DeGiro) and diversify client offerings (e.g., Frankfurter Bankgesellschaft's acquisition of 75.1% of IMAP M&A Consultants)
    • Foreign investors seeking to tap into Western European opportunities and talent (e.g., Bank of China's acquisition of Goodbody Stockbrokers)
    • Management backing themselves (e.g., MBO of Deutsche Regis)
    • Wider market appetite (e.g., FRP Advisory's £80 million AIM IPO)
  • Availability of stressed opportunities (e.g., Beltone Financial's disposal of 60% of Auerbach Grayson)
  • Increasing emphasis on ESG investing—growing demand for:
    • ESG investment opportunities (e.g., Clim8's successful Crowd funding round)
    • Growing customer demand for ESG investment research (e.g., Morningstar's acquisition of Sustainalytics)

Trends to watch

  • Consolidation in the US driving deal-making in Europe (e.g., Morgan Stanley's acquisition of E*Trade Financial)
  • Growing focus on online and digital channels for product delivery
  • Uptick in "acqui-hires"—smaller transactions aimed at securing specific expertise / client teams

Our M&A forecast

Thinning of the herd is likely to continue as "traditional" brokers struggle to remain profitable in a market encroached upon by Bulge Bracket and disrupted by fintech


Publicly reported deals & situations

High investor appetite

Foreign investors:

  • Credit Suisse (China): Acquisition of 17.7% of CS Founder Securities (June 2020)
  • BCAP Partners (Germany): Equity investment in Orka Investments (May 2020)
  • Bank of China (Ireland): Acquisition of Goodbody Stockbrokers (March 2020)


  • Deutsche Regis (Philippines): Acquisition of 49% from Deutsche Bank (January 2020)

Market appetite:

  • X-Trade Brokers (Poland): Disposal by Systexan of 19% stake (May 2020)
  • FRP Advisory (UK): £80 million AIM IPO (April 2020)


Market consolidation to achieve economies of scale & scope

Market highlight:

Morgan Stanley's acquisition of discount broker E-TRADE for US$13 billion is the biggest takeover by a US bank since the global financial crisis


  • Real I.S. (Germany): Acquisition of 15% of Real Exchange (June 2020)
  • Credit Bank of Moscow: (Russia) Acquisition of Investment Bank Vesta (May 2020)
  • flatex (Germany): Acquisition of DeGiro (April 2020)
  • Banque Internationale Arabe de Tunisie (Tunisia): Acquisition of additional 47.92% of Tunisie Valeurs (April 2020)
  • Morgan Stanley (US): Acquisition of E*Trade Financial (February 2020)
  • Interactive Investor (UK): Acquisition of Share PLC (February 2020)
  • Frankfurter Bankgesellschaft (Germany): Acquisition of 75.1% of IMAP M&A Consultants (January 2020)


  • S&P Dow Jones Indices (UK): Multi-asset benchmark development JV with HIS Markit (April 2020)


Mounting competition

Digital "challengers":

  • Ginmon (Germany): Equity investment by BCS (June 2020)
  • Freetrade (UK): Successful £4.5 million Crowd funding round (May 2020)
  • Clim8 (UK): Successful £1.35 million Crowd funding round (May 2020)
  • TransFICC (UK): Successful £5.7 million Series A funding round, led by Albion VC (April 2020)
  • Yova (Germany): Successful €3.7 million Venture funding round, led by Wi Venture (April 2020)
  • Trade Republic (Germany): Successful €61.6 million Series B funding round, led by Accel and Founders Fund (April 2020)
  • Robinhood (UK): Launch in the UK (February 2020)

Organic encroachment:

  • Lunar Bank (Denmark): Stock trading platform JV with Saxo Bank (April 2020)
  • TP Icap (UK): Launch of UK special situations desk (February 2020)
  • Houlihan Lokey (UK): Launch of European equities advisory business (January 2020)

Inorganic encroachment:

  • Morningstar (Netherlands): Acquisition of 60% of Sustainalytics (April 2020)

Alternatives to "traditional" broking:

  • Bricknode (Sweden): Acquisition of Lendysoft (June 2020)


Click here to download Financial services M&A experiences shortness of breath in H1 2020 (PDF)


Financial institutions M&A: Sector trends

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