FCG’s position as the leading advisor to the Nordic financial sector gives us the insight and experience to advice on the challenges financial institutions are facing.
We can successfully assist in every phase of the M&A-process, from identification of targets, planning, structuring and execution of the transaction to the subsequent implementation of the value-creation plan.
Challenges in the financial industry
The financial industry faces significant regulatory challenges, which entails increased requirements from a transaction-, ownership-, risk- and funding perspective. The regulatory framework is under constant change and amendments on current standards are carried out regularly, hence organizations must be able to adjust and adapt its competences on an ongoing basis. Furthermore, digitalization and technological advances as well as new players entering the market (e.g. FinTech companies) are factors that does affect transactions. Companies in the financial industry cannot strive to have all necessary competences in-house, but should actively seek strategic partnerships.
The development of technology has increased considerably in the operations as well as in sales, thus posing challenges to the traditional value-chain within the financial sector. The development has also changed the behavior and preferences of customers, forcing companies to adapt their service- and product offerings. Client meetings have shifted from taking place in the office to digital formats, and the customer experience needs to be adjusted to better suit the new market conditions.
The aftermath of the financial crisis has created a severe macroeconomic situation with expansive monetary policies resulting in low interest rates, which has led to a demand for new products. Initially, the demand was focused on products with low risk but over time, there has been a shift in demand towards high yield and high return products, i.e. high risk products. In some countries, indebtedness levels have increased due to the low interest rate environment, resulting in political uncertainty and postponed investments. In the long run, banks and institutions require stable market conditions and predictive rules and regulations as a basis for long-term strategic decisions.
The regulatory requirements in the financial industry has led to increased barriers of entry, while the development of technology has facilitated non-traditional players to acquire market share due to new demands and new customer behaviors. FinTech- and Startups have recently been successful in acquiring market share within segments that historically has been dominated by traditional banks. Globalization and technical development has amplified this disruption, forcing banks and established institutions to become more cost-efficient and agile.
FCG’s offer and approach
As the leading advisor in the Nordic financial sector, FCG holds a unique position within the industry. This position enables us to support your business in all types of M&A transactions within the financial sector.
Phase 1: Pre-Deal – Identification, Business Case and Valuation
During the initial phase, we assist your business in three major areas. First, we use our existing network and assist in target identification. Second, we provide strategic advice and assist in transaction planning together with the opposing part. Third, we provide a full-scope or second opinion of forecasting, business case and valuation of the target.
With our wide network and profound knowledge of the financial industry, we have a unique position in target identification with respect to individual challenges. Additionally, we assist our clients in establishing contact with potential targets to investigate the appetite for a transaction. At the same time, we continuously ensure tracking of the latest industry practice and prioritized areas from the Financial Supervisory Authorities (FSAs) in Europe.
FCGs strong quantitative team supports your business in the valuation process. We customize financial forecasts and analysis based on current conditions and prerequisites in each transaction. We use both new and traditional methods with high flexibility and problem-solving. We provide ad-hoc analysis and advisory services throughout the entire transaction process. We apply our knowledge and experience from the industry to create a tailored model for your business given the unique circumstances of the case at hand.
Phase 2: Deal – Due Diligence
FCG’s expertise within risk- and capital management, compliance and internal control, IT and information security, financial management, operational risk, treasury management as well as governance and control makes FCG an expert advisor in the DD process. We are able to identify true Red Flags. FCG’s methodology consist of both qualitative and quantitative reviews and benchmarking of results towards industry and regulatory practice.
We have a unique ability to prioritize and we apply a risk based approach which will focus on the most critical areas of the review. All our findings will be evaluated based on proof and significance, with the assumption that all findings should have the possibility to be addressed. Therefore, we can determine the scope and estimate the time for the suggested actions.
We also use our quantitative analytical capabilities to help clients evaluate credit portfolios, historical losses, insurance portfolios and pensions plans as well as securities- and derivatives portfolios.
Phase 3: Signing – SPA Support, Structuring, FSA Dialogue
The financial sector is faced with specific challenges regarding structuring and financing of the acquisition. FCG’s expertise in structural matters for both credit institutes and insurance companies as well as experience from multinationals. In this phase, FCG cooperates with leading law firms and tax specialists to ensure the most suitable and efficient structure for each transaction.
FCG also provide support for our clients in the process of establishing, as well as negotiating the SPA. Our unique knowledge and experience make us well suited to evaluate how severe identified Red Flags are and how they should be addressed. FCG is the most evident partner to ensure that our clients are given the right guarantees and that essential findings and Red Flags are emphasized and addressed by the vendor.
M&A involving companies under the attention of the FSA require that new owners are approved and granted permission (Sw. “Ägarprövning”) by the FSA. Our experience from liaising with the FSA, including licensing applications and other related permissions, enables FCG to provide our clients with a proven process methodology regarding the granting of permissions from the FSA. Through that methodology, our clients are given the best possible conditions to have their application granted.
Phase 4: Post-deal – Identifying and Implementing Actions
FCG has an extensive experience of change management. Changing your business processes and governance structures is part of our core business, having implemented various 100-days plans to larger projects such as divestments or integration projects. Our ambition as consultants in the finance industry is to be the main driver of practice, discover new opportunities and facilitate innovation.
During this phase, we are prepared to implement all of our Red Flags and other findings as identified in the DD process.
FCG has expert knowledge in risk- and capital management, compliance, governance and internal audit, IT and information security, operational risk as well as finance- and treasury management.
We have unique insights into the financial industry and experience from financial institutions ranging from major banks and insurance companies to FinTech- and Startups. We are constantly up to date with the market benchmarks and best practice as well as the focus areas of the FSAs.
Several of our employees have experience from M&A transactions, employment at regulatory authorities as well as from management positions. We have an operational focus and have experience from change management projects and we work closely to our clients. We know how to prioritize and focus the most important issues.
FCG is an independent advisory firm and has no connections to accounting- or audit firms. We assist our clients in every step of the value chain and know what actions to take on our findings and how to execute them to generate maximum customer value.
FCG – The leading advisory firm in the Nordics financial industry – Your innovative partner in risk management, financial regulations and business control.