The Settling of Interest Rates in Both the US and UK Provides a More Stable Environment for Renewed M&A Activity

In the eighth episode of MGAA Conversations, Mike Keating sits down with Kevin Donohue, Managing Director of Mystic Capital Advisors, to explore the evolving mergers and acquisitions (M&A) landscape in both the UK and the US. With the Bank of England recently lowering interest rates and US rates stabilizing, M&A activity is picking up across the Atlantic, providing significant opportunities for insurance firms on both sides.

Kevin shares insights into how American firms are increasingly eyeing London-based MGAs and Lloyd’s brokers for acquisition, while UK firms are looking to establish a stronger foothold in the US by acquiring program administrators. He also highlights the growing interest between the EU, UK, and US markets, driven in part by industry events like the recent MGAA Conference. Additionally, Kevin discusses how the upcoming US presidential election could further stimulate M&A activity, with potential changes in tax policies creating dramatic business opportunities in London.

• M&A Environment Stabilizing: After a slower period due to rising interest rates, both the US and UK are seeing a resurgence in M&A activity, thanks to a more predictable interest rate environment.
• Cross-Atlantic Deals: There is growing appetite from US firms to invest in UK MGAs and Lloyd’s brokers, while UK firms are increasingly looking to acquire program administrators in the US.
• EU-UK-US Acquisitions: Cross-border interest between the EU, UK, and US is on the rise, driven by industry events and networking opportunities.
• Impact of US Presidential Election: Regardless of which party wins, proposed changes in capital gains taxes (by Democrats) or eliminations of certain taxes (by Republicans) are expected to trigger significant M&A activity in the UK.

“With the Bank of England lowering rates and a more controlled interest rate environment, M&A activity is starting to pick up again. I expect deal activity to continue growing over the next 18 months in both London and the US.”

Resources:

• MGAA
• Mystic Capital Advisors

Kevin Donohue is the Managing Director of Mystic Capital Advisors, a leading US-based firm focused on mergers, acquisitions, and advisory services in the insurance industry.

Connect with Kevin on LinkedIn.