Fintech: Battle Between Incumbents and Newcomers Yields Mammoth M&A Deals and Mega-Fundraises
• Record-breaking $130bn in disclosed transaction value in 2019
• Fintech fundraises continuing to grow in size rather than in number
London, UK – 11 February 2020.The latest Fintech M&A market report from Hampleton Partners, the international technology mergers and acquisitions advisor, reveals that 2019 shifted towards blockbuster M&A transactions, historically high deal count levels and impressive valuations.
2019 proved to be the second richest of the decade in terms of fintech M&A activity, with a massive 439 transactions and a disclosed transaction value of over $130 billion – almost twice the largest disclosed value recorded to-date ($71 billion in 2018). Valuation multiples continued their rapid climb in the second half of 2019: the trailing 30-month median revenue multiple peaked at a record 3.8x, while the EBITDA multiple jumped to a whopping 17.3x, just shy of the record set in 1H2015.
Jonathan Simnett, director, Hampleton Partners, said:
“2019 was characterised by record levels of fintech M&A activity, abundant fundraising value, and the achievement of exceptional multiples. Transaction volume in the second half of 2019 saw a three-year high and set a new record of over $130 billion for disclosed transaction value.
“Traditional financial players are battling for relevance and scale – relevance being the ability to offer solutions that are ubiquitously available and in demand; and scale referring to the number of customers incumbents can gain and retain in the face of non-traditional competition. The new battleground requires new capabilities and incumbents must adapt and acquire now, or they will decline later.”
"As the market matures because and with better knowledge of the vertical winners and of the fintech ecosystem, investors are becoming more selective, focusing on proven, mid- to later-stage companies that have shown promise in attaining meaningful scale and profits."
Mammoth M&A transactions
In 2019, four enormous M&A deals set the record for the largest transactions ever recorded in fintech history: Fidelity’s acquisition of Worldpay ($44 billion); Fiserv’s acquisition of First Data ($22 billion); the merger of Global Payments with Total System Services ($21 billion); and London Stock Exchange Group’s acquisition of Refinitiv ($14 billion). Combined, they accounted for a transaction value of almost $101 billion.
Largest fintech disclosed deals of 2H2019
The future for fintech M&A in 2020
Jonathan Simnett continued:
“Fintech M&A globally is expected to remain a hot sector heading into 2020, particularly given the large M&A deals that have taken place so far this year. The payments vertical will no doubt receive an abundance of investment, while insurtech, regtech, wealthtech and B2B platform services are all well positioned for growth. Fintech investors are, and will continue to be, very selective in deploying capital, favouring larger, more promising fundraises and moving away from the “spray and pray” approach of the early stages of the sector.
“Meanwhile, with large technology companies knocking at their doors, incumbent financial institutions must continue to engage aggressively with fintech disruption, whether by building their own capabilities; by partnering; or by acquiring, given the pace of innovation in the sector.”
About Hampleton Partners
Hampleton Partners is at the forefront of international mergers and acquisitions and corporate finance advisory for companies with technology at their core. Hampleton’s experienced deal makers have built, bought and sold over 100 fast-growing tech businesses and provide hands-on expertise and unrivalled advice to tech entrepreneurs and companies which are looking to accelerate growth and maximise value.
With offices in London, Frankfurt, Stockholm and San Francisco, Hampleton offers a global perspective with sector expertise in: Artificial Intelligence, Autotech, Cybersecurity, Digital Commerce, Enterprise Software, Fintech, Healthtech, HR Tech, Insurtech and IT & Business Services.
For more information visit https://www.hampletonpartners.com.
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Note to editors
Hampleton Partners’ Enterprise Software M&A Market Report 1H 2020 is compiled using data and information from the 451 Research database (www.451research.com); CapitalIQ, a product of S&P Global Intelligence; CB Insights; and Financial Technology Partners.
Download the full Hampleton Partners Fintech M&A Market Report: https://www.hampletonpartners.com/reports/fintech-report/.
Contact Hampleton Partners for a confidential conversation regarding any of your merger and acquisition or corporate finance needs with one of our Directors or Sector Principals: https://www.hampletonpartners.com/contact/.