FIG Focus: M&A Trends Shaping Financial Institutions

Chris Moynihan (00:02):

You are listening to Solomon Connects. I’m Chris Moynihan, a Director in the M&A group, and I’m here with Arik Rashkes, head of the Financial Institutions Group, also known as FIG. Arik — thank you for joining us today.

Arik Rashkes (00:15):

Thank you for having me, Chris.

Chris Moynihan (00:17):

In this episode, we’re going to do a deep dive into your sector and talk about some of the recent trends in activity in FIG. But maybe to start, can you talk about the last nine months since you’ve joined Solomon and what you’ve built today?

Arik Rashkes (00:28):

Sure. So there’s a lot to cover and I feel very blessed to be in this position now after nine months on the job. We currently have 15 people in the group — partners, MDs, all the way to analysts — and we feel very good about where we are in terms of coverage. I think that our culture fits perfectly with Solomon’s culture and [I’m] super excited about what we’ve achieved in a pretty short amount of time.

Chris Moynihan (00:56):

FIG’s obviously a broad sector, but you specialize in insurance companies and you have people focused on specialty finance. Can you talk a little bit about some of those subsectors?

Arik Rashkes (01:05):

Sure. So, the lead for me personally as well as a good part of my team is insurance services. We choose our strengths, and that goes both on the balance-sheet side carriers as well as the services side, which is more what I would loosely call the EBITDA businesses; so, think brokers, independent advisors, and so on and so forth. And that actually lingers a little bit into wealth management and asset management, as well as some other distribution avenues in the financial institution space. Then, we have specialty finance, which covers certain spaces within the industry, such as specialty lenders, consumer lenders, commercial lenders, et cetera. We have technology that overarches our subsectors. We have mortgage coverage, real estate coverage, title coverage that is adjacent. Obviously, it’s an insurance product, but it’s adjacent to everything else that I’ve noted, and we try to get into spots and spaces where we feel that we have the expertise and we add value.

Chris Moynihan (02:20):

Markets have been kind of a tale of two halves. The beginning of the year was a bit more tough with tariffs, and I think now you’re finally starting to see some of that deal activity come to head. Is that what you’re seeing in your group as well? And, if so, what are those kinds of subsectors that’s driving it?

Arik Rashkes (02:36):

A hundred percent. I think that the tariffs and kind of political vibe, in general, put a halt to some deal activity, and, obviously, at M&A, these are long processes. Sometimes, it could be nine months a year from beginning to end — and this halt actually delayed everything, right? It put a three-month delay on current deals and probably three-month delays on new deals, but it’s picking up quickly. And the areas where it does pick up more than others is distribution: whether it’s wealth management, RIAs, financial advisors, insurance agencies, insurance brokers. These are sought-after businesses predominantly by private equity, by the sponsors but also by big strategics who want to consolidate further. And there are many of those as well. So, we’re definitely seeing a pickup on that side of the fence. Now, if rates further go down, then we’ll see activity that would actually go into some balance sheet as well. In my view, I think carriers are going to be more attractive. I think that balance-sheet businesses, lenders and mortgage originators — obviously, the mortgage is a cyclical business — and that’s going to give a big push to all these balance sheet-oriented businesses as rates go down. I think that that’s going to start Q4, but ‘26 is probably going to be a strong year from a FIG perspective.

Chris Moynihan (04:12):

And I was talking to one of your other FIG partners, Tannon Krumpelman, and he mentioned this theme that he’s seeing amongst the strategics, the conversions, and then the unbundling of these companies. Do you want to touch on that a little bit, what you’re seeing on that side, not just the sponsors and the activity picking up, but also the rationalization going on amongst those corporate clients?

Arik Rashkes (04:30):

Yeah, a hundred percent. I think that it’s a very good observation by Tannon, and I think that he’s spot on from a consolidation perspective —  RO ops strategies have been in fashion for years now, and I don’t think it’s going away anytime soon. It actually is now lingering into accountants and professional services, and, obviously, we’re building a team to cater exactly to that — but also in unbundling you see a lot of corporates and sponsors or sponsor-backed portfolio companies; meaning they’re kind of parting away from non-core businesses, and that’s not new. I’ll give you an example from the insurance world. There are MGAs; so, managing general agencies — that are underwriting and take minimal risk or little bit of risk, but they’re really not balance-sheet businesses, and they are fed by carriers or reinsurers who actually give them the paper or the capacity, as we call it. I think that these two businesses are valued differently and it creates some kind of a misalignment as folks want to exit. So, sometimes it’s a separation of these two businesses — that is the unbundling that we’re talking about —  and sometimes it’s just non-core businesses for large corporations. They don’t need certain businesses and way back when we’ve done it for life insurance companies, for PNC carriers — and it’s something that would always exist, right? It’s just the convergence into something that is more specialized and probably more precise.

Chris Moynihan (06:17):

Pivoting a little bit, I know you have a lot of deal experience in selling insurance companies, and one of the logical buyers has been private equity. They’ve been very interested in insurance assets. Can you talk a little bit about where that market is now? Are they still actively pursuing insurance opportunities across the spectrum? Are you seeing those in the market?

Arik Rashkes (06:37):

Yeah, so, as it relates to insurance carriers, I think that there is a limited universe of private equity firms that actually can do this right. Insurance is a very capital-intense business, and it requires a very big fund to make sense of an investment. Typically, the returns are not private-equity investment returns, and the examples that we spend a lot of time in are the Apollo Athene situations, where a private equity firm with credit funds owns an annuity carrier — for the most part, life and annuity — and it’s less so on the PNC just because of the duration of the liabilities. But what’s happening — and that’s kind of ongoing — is that these mega funds are getting more and more into insurance as a conduit to AUM; basically to increase  AUM to create permanent capital vehicles to allow them to grow into a holistic asset manager that doesn’t need to go to the market every few years and raise capital, which is a major trend for the past 15 years. On the PNC side, it’s less so as it relates to balance sheet — but what I said before, and I’ll reiterate, is that all these sponsors are very keen on investing around brokers and around EBITDA businesses that are not risk-bearing, that have recurring revenue patterns that are very predictable cash flows, and are growing organically and inorganically very fast. So, these are phenomenal businesses for private equity and that’s why they trade at such high multiples…

Chris Moynihan (08:21):

And, maybe it’s a wrap, so you touch the beginning on 2026, and lower interest rates could potentially drive more deal activity. What are some of the other macro themes that you think could lead to a strong 2026 in FIG?

Arik Rashkes (08:36):

‘26 in my view, is going to be a strong year from an M&A perspective, an overall activity; unless something really unexpected happens in the markets, I can see this trend continuing. The equity markets are very strong; the debt markets are getting stronger — and with rate reduction, this could fuel additional activity for ‘26 and perhaps even to ‘27.

Chris Moynihan (09:03):

Arik, thank you so much for joining us today. Really enjoyed hearing about the FIG industry and the exciting, eventful 2026 that you have planned.

Arik Rashkes (09:11):

Thank you, Chris. It was a pleasure, and I’m sure that we’re going to have a lot to talk about next year.

Chris Moynihan (09:18):

I’m sure. To our listeners, thank you for tuning in. Be sure to check out Solomonpartners.com for more of these insights.