Tech Automates Prudential Operations
Prudential Financial Inc. overhauled its expense management platform and is working on automating its quarterly close process. Savings, mainly from new technology, totaled $635MM in 2021. The efficiencies gained allow the company to redeploy finance employees to focus on acquisitions, product development, and new business lines.1
Berkshire Hathaway to Acquire Alleghany Corp
Berkshire Hathaway has agreed to acquire insurer Alleghany Corp for $11.6 billion or $848.02 a share. The all-cash transaction is Berkshire’s largest deal in years and expands its insurer portfolio (e.g., Geico, General Re), and is a 25% premium over the previous day's (3/18/22) close price. Warren Buffet stated that he had studied the company for 60 years, and many agree that the transaction is a good fit in terms of culture and business model.2
Fed Considers Raising Interest Rates
Chairman of the Federal Reserve, Jerome Powell, said the central bank is preparing to raise interest rates to combat rising inflationary pressures and is prepared to increase rates by half-percent intervals to return to the 2% inflation benchmark. Reducing the balance sheet is also a tool the Fed can use; however, the Fed proceeds with caution as they navigate the Ukraine conflict and after-effects of COVID-19 to avoid pushing the economy into a recession.3
Record Deal-Making in 2021
The last year saw record levels of mergers and acquisitions driven by pent-up demand from 2020, easy money policies, and companies attempting to mitigate the effects of COVID-19 on their operations. This year is also expected to be a good year for deal-making as there is abundant capital and demand; however, rising inflation, political & military conflict, supply chain disruption, and higher taxes will increase volatility in the financial markets.4
Domestic Banks Outperform Global Banks
Large U.S. regional and super-regional banks are outperforming their global counterparts as they have less exposure to global markets and will benefit from rising rates and loan growth at home. Furthermore, several banks note that they are seeing clients increasing the utilization of their credit lines, which will lead to increased interest income as their clients hedge against volatility.5
Largest Transactions Closed
- Sterling Bancorp
- Webster Financial Corporation
- First Midwest Bancorp, Inc.
- Old National Bancorp
- CIT Group Inc.
- First-Citizens Bank & Trust Company
- Great Western Bancorp, Inc.
- First Interstate BancSystem, Inc.
- Bryn Mawr Bank Corporation
- WSFS Financial Corporation
- Atlantic Capital Bancshares, Inc.
- SouthState Corporation
- Reliant Bancorp, Inc.
- United Community Banks, Inc.
- Ohio National Holdings, Inc.
- Constellation Insurance Holdings, Inc.
- Howard Bancorp, Inc.
- F.N.B. Corporation
- Independence Holding Company
- Geneve Holdings, Inc.
Other Financial Buyer Transactions Closed
- Marlin Business Services Corp.
- HPS Investment Partners, LLC
- Title Resources Guaranty Company
- Centerbridge Partners, L.P.
Other Strategic Buyer Transactions Closed
- Hudson Capital Inc.
- Hudson Capital Inc.
- 1st Constitution Bancorp
- Lakeland Bancorp, Inc.
- Suncrest Bank
- Citizens Business Bank
- Madison National Life Insurance Company, Inc.
- Horace Mann Educators Corporation
- Standard Security Life Insurance Company of New York
- Reliance Standard Life Insurance Company
- Citizens Union Bancorp of Shelbyville, Inc.
- German American Bancorp, Inc.
- Commonwealth Bancshares, Inc.
- Stock Yards Bancorp, Inc.
- Delta Bancshares Company
- First Mid Bancshares, Inc.
- Waverly and Shell Rock offices of Security State Bank
- CUSB Bank
- Vantage Financial, LLC
- Peoples Bank
- Certain Assets and Liabilities of the Bank of Honolulu
- Royal Business Bank
- Friendswood Capital Corporation
- Home Bancorp, Inc.
- Pacific Enterprise Bancorp
- BayCom Corp
This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.
EBIT - Earnings Before Interest and Taxes