Intellectual Honesty, Our September Report on M&A in the FinTech, Enterprise Data & Analytics Industry

Sep 16, 2019

Intellectual Honesty, Our September Report on M&A in the FinTech, Enterprise Data & Analytics Industry

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Dear Clients and Friends,

The report found here shows recent m&a transactions, trends, and valuations in the seven segments of the FinTech, Data and Analytics world that we follow and sometimes lead. As you will see, valuations and m&a trends in our industry remain very strong, but that’s not our subject this month.

Recently, a friend sent us a 2016 investor letter by Lead Edge Capital, a New York-based growth equity venture firm that has invested in companies such as Uber, Spotify and TransferWise. The letter discussed the importance of “intellectual honesty“ in the m&a world. We endorse the philosophy wholeheartedly. We’ve circulated the letter internally. It’s a good reminder that intellectual honesty matters.

As the letter notes, it’s not only politicians, used car salesmen, and the media who sometimes skew facts in an effort to advance their own agendas—too often it is also sellers (and sometimes their bankers). We see it too often: if companies don’t have favorable cash profits, they report adjusted profits or gross margins; if they don’t have strong revenue or growth, they report on revenue indicators such as active users, page views, subscribers, or downloads.

There’s nothing inherently illegal or immoral about trying to present your company in the best light. We often help companies do just that. However, there is a limit. When a company tries to hide the truth, or worse—lies, they violate moral principles that are a prerequisite for success in our industry—and in life.  It’s all about “Trust”.

We have seen firms try to inflate revenue and to “adjust” EBITDA  in ways that are not defensible. We have seen them fail to disclose material facts including golden parachutes, lawsuits and defections by major customers. The list goes on…

Intellectual honesty matters for many reasons. It’s not only that you are likely to be caught — sometimes people do get away with these things. It’s also that m&a transactions, like marriages, are built on trust.  And when you start exaggerating the truth, obfuscating, or worse, you put the trust bond at risk.

I wrote a book all about the right way to Win on Wall Street and it’s not about taking advantage of the unwitting, unsophisticated, or unsuspecting. Intellectual honesty matters in m&a because it’s the right way to do business. It’s our only way.

We’ll be attending The Futures and Options Expo in Chicago, October 29th – 31st, and Money 2020 in Las Vegas, October 25th – 28th.  If you’d like to arrange a meeting at either of these events, please contact Natalie Goins (ngoins@marlinllc.com).

A few of the more interesting recent FinTech, Data, and Analytic transactions include:

  • Hong Kong Exchanges and Clearing (HKEX) announced an unsolicited bid for the London Stock Exchange (LSE) for $38 billion
  • DataRobot (Boston, MA) raised $200mm in Series E funding round led by Meritech Capital and Sapphire Ventures at a valuation of more than $1.0 billion
  • Nubank (Sao Paulo, Brazil) raised $400mm in a Series F funding round led by TCV and joined by DST Global, Sequoia Capital and RedPoint ventures at a $10 billion+ valuation
  • Curve 1 (London, UK) raised $55mm in a Series B funding round led by Gauss Ventures, valuing the company at $250mm post-money
  • DataRobot (Boston, MA) raised $200mm in a Series E funding round led by Meritech Capital and Sapphire Ventures at a valuation of more than $1 billion
  • London Stock Exchange Group plc (LSE:LSE) agreed to acquire Refinitiv for $27bn in total enterprise value
  • Cint (Stockholm, Sweden) acquires P2Sample (M&A Client) (Alpharetta, GA). Read more here

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