What's Driving Stock Market Selectivity & Navigating Volatile Yields

**SPEAKER_1** (0:00)
The M&A market was slower than expected in the first half of 2026, but what can we expect for the second half, and what sectors should we look out for and increase in activity? For more, we wanna welcome in Steven Nigro, the managing partner of Tag Financial Group, joining us here at the Big Board. Steven, it's good to see you this morning.

**Steven Nigro** (0:18)
It's great to be here.

**SPEAKER_1** (0:19)
All right, so let's talk about the first half of this year. Whether we're talking about M&A or IPO activity this year, it was a little slower. It's not like things ground to a halt at all, but slower than expected. Part of that, I think, had to do with the volatility that we started the market and the unexpected geopolitical event that we're still dealing with, the war with Iran. You bet. But talk to me about just how you characterized overall the first half of the year, and let's get into expectations.

**Steven Nigro** (0:44)
Well, you know, I'm on the ground, so we see things firsthand. We see when it happens. In fact, we have a due diligence practice that does about 60 engagements a year. I could see by the number of engagements we have, things are slowing or getting a little bit of escalating. So it was slow.
And I haven't had a W-2 for 25 years, so I need to close deals, so I watch it carefully. But we did see that activity slow. I did see what was in our pipeline, didn't panic that much. But then, similar to last year, last year was one quarter, this year was half a year, but all of a sudden, we're seeing an uptick in activity, people starting to ignore what's going on. It's a little bit more selective. There is a flight to quality, I think, probably caused by the higher cost of funding, where buyers are now taking longer on due diligence, quality of earnings, a little bit more selective in what they're buying.

**SPEAKER_1** (1:40)
So let's talk about that. It feels like rates obviously are more important than ever.
And in some respects, to your point about compartmentalizing, I'll use that term, it feels like there's some compartmentalization of certain things, right? Go ahead.

**Steven Nigro** (1:55)
Yeah, no, we specialize in the insurance industry. And it is, I say insulated from macroeconomic drivers, but I should modify that and say not unaffected, insulated but not unaffected. Of course, there's an effect on cost of capital and so on. But that has moved buyers to become more selective.
Processes are taking longer. We have to get our clients ready a little bit sooner and make them that readiness a little bit more robust. That's why that due diligence practice, we now shift to the sell side where we could say, I'll get you ready to sell because buyers are going to be applying more scrutiny.

**SPEAKER_1** (2:37)
Let me ask you this. So insurance you say is insulated but not unaffected, insulated because it's a need?

**Steven Nigro** (2:43)
Insulated because there's a lot of capital out there in the marketplace and because other factors are affecting or offsetting the fact that there's higher cost of capital. The most prominent of which is the modularization of the insurance value chain, I'll explain, where capital and underwriting and distribution are being separated and all the parts of that insurance value chain, distribution, underwriting, capital, infrastructure, data, technology are now being burst into components.
That's the good news, because there are more entities to invest in, more that is driving M&A activity. On the insurance distribution side, insurance brokers, there's 25 or 30,000 of them around in this country and they are selling. It's a very, very liquid market and a lot of dollars chasing it.

**SPEAKER_1** (3:40)
Let me ask you this, because you talked about readiness and it reminds me of a conversation I have with Jim Neeson, the managing partner of Connor Group, who is, they specialize in companies coming to public markets. So one of the things he's talked to me about, and bear with me as we tease this out, is that over the past several years now, it takes longer to bring companies to public markets. And he uses the analogy of it's like getting ready in the gym. Do you find a similar formula for the M&A activity that you're doing?

**Steven Nigro** (4:12)
Well, yes, because our clients are at that level below that IPO readiness client, right? So they oftentimes, and especially insurance brokers, where they're salespeople, they don't understand what a back office is, what a balance sheet is, what internal controls and financial reporting are. We have gotten them ready to do that from scratch. I mean, we've built the accounting systems for clients. I almost quit, my partner took, we were getting a client ready for sale and I said, I can't do this anymore, quit. He said, you can't quit, we own the firm, so you can't stay where you are.