Financial services M&A continues its climb, and asset manager mergers are proving attractive rungs on the dealmaking ladder. Downward pressure on investment fees driven by the shift toward passive investment have sent managers in pursuit of scale, even as multiples continue to rise. Growth in client wealth drives assets under management to new heights as well: PwC estimates the global figure could hit $139 trillion by 2025.

Private equity’s growing share of deal volume is being felt in financial services as well, potentially prompting a need for price discipline in a higher multiple landscape. Dealmakers tell Mergers & Acquisitions that proprietary deal sourcing pipelines are one way to keep multiples low, but competition from new funds and cheap capital could continue to prove strong headwinds.

Deal composition across financial services continues to favor asset management transactions, with banking/capital markets and insurance deals following suit. Insurance sector deals have also taken a page from the types of transactions pursued by banks, in that technology acquisition is driving merger interest, according to a 2Q report from Deloitte. Claim providers seek machine learning capabilities to identify fraudulent claims on the rise, due to spiking unemployment claims and lower business revenues.

Add private equity’s renewed interest in the insurance space as a source of permanent capital, and financial services as a whole looks set for continued dealmaker focus.