008: The settling of interest rates in both the US and the UK provides a more stable environment for renewed M&A activity - with Kevin Donoghue

With the Bank of England’s recent lowering of interest rates, and the settling of rates in the US, M&A activity across the Atlantic is likely to amplify.

In this episode, we are thrilled to be speaking with Kevin Donoghue, Managing Director of Mystic Capital Advisors, about the stabilisation of the M&A environment and the various opportunities that are likely to emerge as a result. He notes that there is a significant appetite from American firms in London-based MGAs and Lloyds brokers. Similarly, several Lloyds brokers are looking to acquire program administrators in the US to expand their beachhead.

Kevin suggests that there is also a very encouraging increase in interest from the EU into UK firms, and vice versa, and between the EU and the US. He attributes these renewed acquisitions dialogues to events such as the recent MGAA Conference, facilitating cross-border conversations. The upcoming US presidential election is also set to stimulate M&A activity, irrespective of which party ultimately reigns victorious. The Democrats’ proposed raise in capital gains rates, and the Republicans’ elimination of taxes on tips and on social security payments, would both lead to considerable and dramatic business activity in the London market.

Thus, whatever the outcome, new opportunities in the UK will emerge.

 

Quotes:

"As the M&A environment goes, so we focus on the US and London, and the two markets have been somewhat, consistently active. The US last year and probably the past 18 months has been a bit of a slower pace of M&A activity than, say, the previous 36 months going into that.

And that is a function of rising interest rates, but with the interest rate environment here and in London, with the Bank of England lowering rates yesterday, M&A activity has started to pick up again. More deals are getting done, there's more, focus on, a controlled interest rate environment versus where are rates going. Are they going up, going down.

Whenever that happens, people kind of tend to slow down M&A activity. But now it's a little bit more controlled, a little bit more predictable. So I would expect over the next 18 months, M&A activity will continue to pick up both in London and in the US. And we're seeing that deal activity right now" – Kevin Donoghue

 

Resources:

MGAA - https://www.mgaa.co.uk/

Mystic Capital - https://www.mysticcapital.com/

 

About the Guest:

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

Kevin’s LinkedIn Profile: https://www.linkedin.com/in/kevin-patrick-donoghue-6833783/

 

About the Host:

Mike's extensive expertise in the insurance sector has allowed him to witness and adapt to the dynamic shifts within the industry. Throughout his 40 year career, he has navigated the traditional realms of insurers, brokers, and MGAs (Managing General Agents) across both Commercial and Personal Lines markets.

He has held Executive positions at AXA, Midas, UK General and most recently Insurtech start up Qlaims before becoming Chief Executive Officer at the MGAA in September 2020. 

Mike is excited about the new MGAA podcast series, which aims to showcase key figures in the UK insurance industry and beyond, providing insight into the challenges and opportunities that the MGA industry encounters.

Mike's LinkedIn Profile: https://www.linkedin.com/in/michael-keating-230b8424/