M&A advisory firm Hampleton Partners has released its latest fintech industry M&A report, and the major takeaway from the report is the volume of industry deals dropped dramatically towards the end of 2016.
The drop in the value of deals was nowhere near as significant as the fall in number of transactions, indicating that appetite for investment has shifted to more mature business in smaller volumes.
Increasing the positivity of the report somewhat, Hampleton Partners carried to explain that there were enclaves of the fintech market that continue to be of interest to buyers.
The report stated that targeted acquisitions of mature fintech companies will be a priority for buyers who are looking to scale the business, as well as financial services that are looking to replace legacy systems with sleeker, more efficient technologies and see acquisiton of fintech firms as the most pudent way of doing so.
Innovative payments solutions, including peer-to-peer payments technology, will also remain popular in the M&A market, as inevitably will be companies providing blockchain solutions. Robo-advisory in wealth management is another area the report believes will be heavily invest in throughout 2017, as part of a greater investment push into AI in financial services in general.
Some of the key highlights from the report were:
- Fintech industry M&A transaction volumes fell 32% between H1 2016 and H2 2016
- EBITDA multiples for concluded transactions fell from 17.6x in H1 2015 to 15.4x in H1 2016, and then further to 15.0x in H2 2016
- Revenue multiples of completed transactions fell to a four-year low of 2.2x in H2 2016
- 550 companies completed an acquisition in the last 30 months (Q2 2014 – Q2 2016), 91 of which made more than one acquisition
- The median disclosed transaction value during these 30 months was $58m
- Broadridge (eight) has completed the most acquisitions in that period
- SS&C, ICE (Intercontinental Exchange), and HIS Markit each completed six acquisitions
- TD Ameritrade Holding Corp’s $4bn acquisition of Scottrade Financial was the most valuable declared fintech acquisition of 2016
To download the complete Hambleton Partners report click here.
Some of the deals that were announced in the past month included:
Prepaid Financial Services buys tech development specialist Spectre Technologies Limited
Alternative banking provider Prepaid Financial Services has strengthened its position in the market this month by acquiring Malta-based tech firm Spectre Technologies Limited.
Acquiring Spectre Technologies makes sense for PFS, the provider has established history of providing software for financial services and the fintech industry, and has developed e-wallets, FX systems, mobile apps, and loading networks specifically for PFS.
Len Busuttil, CEO, Spectre IT said of the deal: “We have worked with PFS since its inception and look forward to further cementing our working relationship through this acquisition. Our team of more than 45 technical staff will provide additional support in building innovative solutions, as well as acting in an advisory role to organisations when launching new products and services to the market”
Noel Moran, CEO, Prepaid Financial Services added: “This acquisition is indicative of PFS’s commitment to innovation, which centres on providing alternative banking solutions to our clients and their end users. Our partnership with STL will allow us to accelerate the delivery of products and programmes to meet their needs in even shorter timeframes than we do today.
“The partnership will also enable PFS to provide white-label mobile payments solutions, such as Apple Pay, Samsung Pay and Android Pay to our new and existing clients and wallet partners, giving them access to our IBAN and SEPA payments solution throughout Europe, thus enhancing their value proposition. This cross-border mobile payment solution will be a major benefit for clients, regardless of whether they are a bank, a mobile operator, or a fintech startup.
“PFS has worked closely with the team at Spectre Technologies for a number of years and has always been impressed with how quickly they are able to build bespoke payment infrastructure and programmes for our clients. This acquisition will further solidify our position as one of the leading payments providers in Europe; with our technology platform and our ability to innovate, we are now even better equipped to cater to the needs of our clients in today’s fast changing payment and software landscape.”
Axway announces Syncplicity acquisition
Data management specialist Axway has publicised its deal to acquire enterprise file sync and share (EFSS) solution specialist Syncplicity.
The acquisition will enable Axway to develop its Amplify platform, improving collaboration security and engagement for its customers across digital ecosystems.
“As businesses continue to collaborate using cloud-based tools, it’s imperative that file exchanges and synchronization between individuals is a secure and seamless experience,” said Jean-Marc Lazzari, CEO at Axway. “Together, Axway and Syncplicity will create a one stop shop for digital shared services.”
“Syncplicity’s EFSS expertise and product excellence will complement Axway MFT solutions perfectly by encouraging and supporting greater collaboration among employees, partners and customers,” said Jonathan Huberman, CEO at Syncplicity. “The Syncplicity team is proud to join Axway to create the best possible outcomes for our customers.”
The financials of the deal were kept private.