Maybe Greed Is Not Good? Can Tech Be Successful with a Conscience?

Jan 23, 2020

Maybe Greed Is Not Good? Can Tech Be Successful with a Conscience?

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Dear Clients and Friends,

Last year was strong for m&a in the seven segments of the FinTech and Data and Analytics world that we follow and sometimes lead.  As you will see from the report found here, for companies in our world that have achieved scale and strong top-line growth, values were up, as was transaction volume.  We had our strongest year in the 18 years we have been in business – helping clients successfully complete 14 m&a transactions.

As we enter a new decade, the market remains strong.  Fears of recession that concerned many a year ago seem to have waned (a bit).  Now there are new concerns: Has the world changed?  Is greed still good?  Can tech firms keep up their disruptive approach – and their high market valuations – if their leaders are forced to grow a conscience – and take into account needs beyond those of shareholders?

A long time ago, in business school, I was taught that it is in the enlightened long-term best interests of a company to focus on meeting the needs of all stakeholders – including customers, employees, vendors and community.  Over the past 30 years or so that philosophy seems to have given way to a shorter-term focus on maximizing shareowner value – only.   Some blame that approach on a series of spectacular fails – including Google’s alleged censorship in China and paying $90mm in severance to an executive accused of misconduct;  Facebook’s involvement with hate speech in Myanmar and with Cambridge Analytica and the US elections of 2016; Uber’s alleged abusive workplace culture;   WeWork’s unrestrained growth (and culture); and Boeing’s 737 Max challenges.

In August of last year, 181 CEO members of the Business Roundtable committed to lead their companies for the benefit of all stakeholders.  Signatories included some tech firms such as Apple, Oracle, SAP, and SAS, as well many others (e.g., ADP, Blackrock, Carlyle, Cognizant, FIS, Goldman Sachs, Citi, JP Morgan, Morgan Stanley, Silverlake, and S&P.)  But frankly we didn’t see much change in our world.

Then last week, Laurence Fink, founder and chief executive of BlackRock upped the ante.  He wrote a letter to the CEO of companies in which BlackRock is invested to say that each company must not only deliver financial performance, but also show how it makes a positive contribution to society.  And Blackrock is watching.  When you have Six Trillion Dollars of assets under management, people tend to pay attention. We hope so.

As you will see from our report found here, values in the m&a market are strong for those companies that manage to meet the needs of all stakeholders.  We think a new trend is taking shape. Can we have a new “Roaring 20s” with a conscience? We believe so.  And we welcome it.

A few of the more interesting recent FinTech, Data, and Analytics transactions this month include:

  • Q2 Holdings (Austin, TX) agreed to buy Lender Performance Group (Charlotte, NC) for $510 million (Banking software)
  • Verafin (Canada based) raised C$515mm in equity and debt funding round led by Spectrum Equity
  • BharatPe (New Delhi, India) raised $50mm in an equity funding round led by Ribbit Capital & Steadview Capital
  • Broadridge agreed to acquire Financial Database Services (Processing and Compliance Software for broker-dealers)
  • Bursa Malaysia Berhad acquires remaining 25% stake in Bursa Malaysia Derivatives that it did not already own from CME Group
  • PayPal acquired a 70% stake in GoPay (China based)

Recently we were the recipients of three awards of which we are particularly pleased:  ACQ5 – TMT Advisory Firm of the YearACQ5 – Gamechanger of the Year (Ken Marlin)ACQ5 – Middle-Market Investment Bank of the Year.

We will be at The Futures and Options Expo in Boca Raton, FL March 10th – 12th and Innovate Finance Global Summit in London, England April 20th – 24th, if you would like to arrange a meeting at any of these upcoming events, please contact Natalie Goins ngoins@marlinllc.com.

Sincerely,

Ken

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