A breakdown of the biggest deals announced in the last month
Synchronoss and Intralinks to merge
During the first week of December Synchronoss Technologies announced that it had agreed a deal to purchase Intralinks Holdings, a provider of on-demand solutions for businesses to securely collaborate, communicate and exchange critical information, for approximately $821m. The acquisition, which equates to $13 per Intralinks share, is expected to close in the second half of Q1 2017.
Former chief executive of Intralinks Ron Hovsepian will step up to the position of CEO of the combined companies, while current Synchronoss CEO Stephen Waldis will move to the position of chairman of the board.
Guidewire Software acquires ISCS for $160m
Property and Casualty insurance software provider Guidewire Software has agreed to acquire cloud software firm ISCS in a $160m all-cash deal. The deal is expected to close at the end of February 2017.
The deal will increase Guidewire’s capability to offer P&C insurance clients a cloud-based system that supports the entire insurance cycle.
“Like Guidewire, ISCS is a software company focused exclusively on serving P&C insurers,” said Marcus Ryu, chief executive officer, Guidewire Software. “Its technology and expertise will enable us to provide a new option to our customers and augment our progress in delivering cloud-based products. We are excited by the opportunity to welcome the ISCS team and customers to our community.”
The marriage of two vendors with different areas of expertise in the same market makes sense from both a Guidewire and ISCS perspective. Guidewire traditionally targets contracts with larger P&C insurers, whilst ISCS specialises in cloud-based solutions for the same market, and has previously targeted much smaller partners. Both providers have been healthily growing revenues at a rate of 20% per year, Guidewire CFO Richard Hart confirmed to industry analysts.
The deal was principally made between ISCS owners Andrew Scurto and Timothy Shelton, and Guidewire subsidiary company Igloo Acquisition Sub Inc.
FactSet announces Vermilion purchase
In the week leading up to Christmas FactSet Research Systems announced that it had acquired client reporting and communications software supplier Vermilion a month previously for cash considerations of $67m.
The FactSet product currently amalgamates global markets, public and private companies, equity and fixed income portfolio monitoring tools into one complete interface. The integrated financial information and analytical application supplier is adding is adding a much sought-after client reporting tool to its service in purchasing Vermilion.
FactSet previously acquired multi-asset class investment management solutions provider CYMBA for $8m in September 2016.
SS&C closes Conifer Financial Services deal
Last month global financial services and investment software provider SS&C confirmed that it had purchased Conifer Financial Services for $88.5m.
Independent assets firm Conifer currently has over 200 clients on its books, with $110bn of combined assets under administration, according to a statement released by SS&C.
"Joining with SS&C will allow us to accelerate our growth plans and pace of innovation," said Jack McDonald, Conifer's chief executive officer. "SS&C's innovations in cloud and mobile technology are transforming asset servicing. We look forward to introducing this winning strategy to our customers and new markets."
The move is SS&C’s second major acquisition of Q4 2016, following the purchase of CRM platform provider Salentica in October. SS&C also acquired Wells Fargo Global Fund Services in September 2016.
The Conifer deal will increase SS&C’s presence on the West Coast and extends SSC’s ongoing project of developing its range of services to its growing customer base, the company also reported.
Senior management at Conifer will continue to lead the business after the acquisition completes.
Golden Gate Capital to acquire Neustar
NYSE-listed real-time information services provider Neustar revealed that it had agreed to be acquired by a private investment group led by Golden Gate Capital in mid-December. The deal is valued at approximately $2.9bn, or $33.50 per share, a 45% premium on Neustar’s closing share price the day before Golden Gate Capital registered its equity position.
“We are pleased to have reached this agreement, which will deliver certain and immediate value to our shareholders,” James Cullen, Neustar’s chairman of the board of directors, told the press. “We are confident that today’s announcement represents the best path forward for all of Neustar’s stakeholders.”
The deal is expected to complete no later than the end of Q3 2017.
Industry commentators having been waxing lyrical since Q4 2016 an beyond that 2017 will be the year that M&A activity in the fintech accelerates rapidly, as pressure on large financial incumbents to adapt and be more flexible with their product offerings continues to rise. Widespread innovation will inevitably trigger a backlash as financial services scramble to cover themselves against the risk of losing market share to disruptors, and software developers will strive to add additional strings to their bow of fintech product offerings.
Whether it’s time to push all-in on the M&A explosion immediately is unclear (industry consensus at the beginning of 2016 pointed towards the increase in activity taking place within the next three years), but there seems little doubt that when the wave does reach full-force it will be more severe than previous fintech M&A surges of the past two decades.
One factor that is becoming clearer already in 2017 is that China won’t be slowing down its rate of investment in fintech. The metaphorical New Year’s Eve party clean-up had scarcely finished as it was reported Asia FinTech FOF, a public/private consortium focusing on M&A investment, had freed-up a $1.44bn fund dedicated to attacking the fintech mergers and acquisitions market in 2017.
China pumping finance into the fintech market is far from a new development for the industry though. The Asian fintech market, spearheaded by China, saw $10bn of investment in H1 2016, compared to $4.6bn in North America and $1.8bn in Europe. The replenishment of funds for this purpose will more than likely see this trend continue.
A report released by DBS and Ernst & Young states than China is now the premier fintech destination in the world, ahead of Silicon Valley, London and New York.