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How many ways can m&a transform a Fintech company? – Our April 2017 Fintech Market Update

Apr 27, 2017

How many ways can m&a transform a Fintech company? – Our April 2017 Fintech Market Update

Fintech, Market Update, Newsletter, Report, Uncategorized 0 Comments

Dear Clients and Friends,

The report found here highlights some of the m&a trends and transactions in the seven segments of the Fintech world that we follow and sometimes lead. It can be found here.

As 2017 rolls along, the Fintech sector remains an incredibly exciting place for us, with substantial m&a activity for companies offering technology and services to those involved with capital markets, banking, insurance, GRC, wealth management, payments, and more. Over the past few years we’ve seen a number of transformative Fintech deals such as ICE’s $7.8bn acquisition of Interactive Data; SS&C’s $2.7bn acquisition of Advent Software; Fidelity National’s $9bn acquisition of SunGard; and the merger of Markit and IHS.

But for us, the more interesting phenomena has been the many smaller transactions led by these same firms, as well as by others, including Blackrock, Ipreo, FactSet, Morningstar, Envestnet, and Thomson Reuters as well as by a host of Fintech deals led by PE firms. It sometimes seems as if the world is filled with people seeking to acquire their way to interesting fintech capabilities and markets – and that’s good for us.

As an example, over the past several years, FactSet has transformed itself from a tool for analysts to a full service Fintech firm through a series of acquisitions including the recent acquisition of Aquiline-backed BISAM for over $200M (more than 7x revenue). Following its acquisitions of Portware and Vermillion in the last couple of years, FactSet is aggressively reinventing itself – with a multi-pronged strategic plan covering sales and trading, risk and wealth management.

At the same time, private equity firm Vista Equity Partners has been sponsoring its own transformative transactions such as acquiring Canada’s D+H at an enterprise value of approximately $3.6bn – and then combining D+H with UK-based Misys, which Vista took private in 2015, creating one of the largest  fintech players in the market with over $2bn in revenue. The list of recent deals is long and includes China-based Ant Financial’s $4.3bn venture round, and Ant’s subsequent $880mn acquisition of Texas-based MoneyGram earlier this year.

In these, and other cases it will be interesting to see how they derive revenue synergies while at the same time driving cost efficiencies from two large, complex, diversified firms. It’s never easy.

The report found here highlights some of the more interesting deals this month including:

  • Vista Equity Partners (Austin, TX) agreed to acquire D+H for $3.5bn, valuing the company at an implied 2.8x LTM revenue and 14.6x LTM EBITDA,
  • Travelers (NYSE:TRV) agreed to acquire Simply Business from Aquiline Capital Partners for $490mm,
  • Warburg Pincus (New York, NY) agreed to acquire a 35% stake in Avaloq for $304mm, valuing the company at an implied 1.6x LTM revenue and 10.5x LTM EBITDA,
  • FactSet (NYSE:FDS) acquired BISAM Technologies from Aquiline for $205mm, valuing the company at an implied 7.3x 2016 revenue,
  • Funding Circle (London, United Kingdom) raised GBP82mm (~$100mm) in its sixth round of funding led by existing investor Accel Partners.

Please see our full April Fintech Market Update, here.

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