Transaction insurance limits rise on back of strong M&A market

14 June 2018

Following a period of high M&A and divestment activity, companies are increasingly opting for transactional risk insurance policies. North America and Europe are the most active markets according to a new report from Marsh. Transactional risk insurance policies placed by the advisory firm surpassed $20 billion in 2017.

M&A activity soared across industries last year with total deal value exceeding $3 trillion for the third year running. Ample capital – thanks to private equity fundraising and healthy balance sheets – and low interest rates encouraged activity, although high competition for new assets put a dampener on the total volume of deals.

These are the conclusions from leading insurance and risk advisory firm Marsh in its latest Transaction Risk Report. It assesses the insurance market burgeoning around M&A activity, which has seen a growing demand for risk reduction advice and sale of insurance products. Marsh is part of the Marsh & McLennan group of consulting firms, which also includes Oliver Wyman.

M&A activity in 2017

The total value of insurance policies placed by Marsh increased by 38% from $14.6 billion in 2016 to $20.1 billion the following year. Both private equity and corporate investors increased their consumption of transactional risk insurance. In 2017 they split the market evenly, compared to 2016 when 54% of clients were PE firms and 46% corporates.

The rise in transactional risk insurance limits was due to both an increase in the typical size of a deal and a jump in the volume of deals in which insurance was bought. The number of transactional risk insurance policies placed by Marsh rose by 28% from 2016 to 2017, when demand exceeded 700. There was also heightened demand reported by the advisory firm for risk solutions – especially with regard to tax and healthcare compliance.

Risk insurance limits

Transactional risk insurance growth has been strongest in the US and Canada, which has also led to rising M&A activity. In the consulting space alone, 2018 has already been a strong year for mergers and acquisitions. This is especially true in the IT sector, which saw RSM expand its US footprint with the absorption of Seattle-based Explore Consulting.

Further south, Nashville’s leading management consultancy was recently snapped up by Ankura. Private equity firms have also played their role in catalyzing consulting M&A activity, with Great Hill Partners contributing almost $75 million to further the prodigious expansion of cloud consulting firm Reliam.


Sionic Advisors merges with UK counterpart Catalyst Development

09 April 2019

NYC-based financial services specialist consultancy Sionic Advisors has merged with London-based Catalyst Development, a specialist financial markets consulting firm. The deal, backed by private equity firm Livingbridge, will see Catalyst grow to more than 300 professionals across a dozen locations in North America, Europe, and Asia, with a combined revenue of more than $60 million. 

Demand for digital transformation and regulatory and compliance services is currently booming in the financial services sector. Financial consulting services spending has swelled globally from $17 billion in 2008 to $38 billion in 2018, for a compound annual growth rate (CAGR) of 8-10%. More than 70% of spending was on technology, operations, and risk and regulatory compliance and change services in North America, Europe, and Asia – the focus areas of Sionic Advisors.

Founded in 2014, the consultancy specializes in financial crime and compliance, regulatory and compliance, finance and operations transformation, risk management, and strategic technology. Sionic currently employs approximately 160 people in offices across New York, Toronto, London, Madrid, Zurich, Singapore, Stockholm, Mumbai, Chennai, and Bangalore.

Sionic Advisors merges with UK counterpart Catalyst DevelopmentSionic will merge with Catalyst, a similarly sized consulting firm with similar competencies. Founded in 1994, Catalyst delivers strategy, operations, regulatory, technology, and change consulting services to financial services firms. The consultancy has approximately 160 employees across offices in London, Jersey, and Vilnius, Lithuania. Over the past 25 years, Catalyst has worked with more than 70 clients in more than 30 financial centers worldwide.

The deal, which creates a geographically broad, large-scale financial services consulting specialist, was backed by UK-based private equity firm Livingbridge, which invests in fast-growing firms valued up to $250 million. Livingbridge previous invested in Catalyst in 2017, and then backed the consultancy’s acquisition of wealth management specialist Knadel in February 2018.

Livingbridge’s US team worked with Catalyst management to develop the firm’s US acquisition strategy, while supporting the merger execution. Catalyst’s private equity partner expects the consultancy to target further strategic acquisitions in the future to meet demand in the fast-growing market.

“This is a transformational merger that will create a world-leading specialist firm,” Andrew Middleton, Catalyst Group CEO, said. “Sionic has highly regarded expertise in our core banking market, enabling us to scale our delivery of complex assignments for clients worldwide, and a lead position in the US and Canada. Catalyst has a lead position in London and both offshore and nearshore offices, along with specialist asset and wealth management expertise, an international track record in people, talent and change and a global track record of developing financial markets infrastructure for clearing houses and exchanges,” Middleton said. 

“This is a perfect match. We’re known as experts in our field and as fast-growth disruptors of outdated models of consultancy. Like Catalyst, we deliver measurable value and best in class change services in control and governance, regulatory change, operations, risk, finance and technology," Craig Sher, Sionic cofounder and Group CEO, added.