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The Fourth Wave of Fintech: It’s All About the Analytics – Our July 2016 Fintech Market Update

Jul 27, 2016

The Fourth Wave of Fintech: It’s All About the Analytics – Our July 2016 Fintech Market Update

Fintech, Market Update, Newsletter, Report, Trends, Valuation , , 0 Comments

Dear Clients and Friends:

Our latest M&A update on the recent transactions and values in the seven separate sectors of the fintech market that we follow and sometimes lead is HERE.

When we started working with fintech companies more than 20 years ago, the big money was mostly b2b and about giving professionals access to proprietary data; Reuters had proprietary news, FX rates and more; Telerate had government bond prices, terms and conditions; Interactive Data had daily valuation prices on illiquid debt instruments from around the world; Moody’s had bond ratings; etc. While content still has a chance to be king – it has become tougher to maintain content exclusivity in a world in which there is more and more fungible data available. Somewhere along the way a second path to fintech success emerged: the distribution channel. Companies such as Reuters (again) Bridge, Factset, Capital IQ and even Bloomberg, to some extent, emerged as highly successful aggregators, integrators, cleaners and distributors of a wide range of financial data – to which they added proprietary data, where they could. At the same time we saw the rise of a third wave – b2b software vendors that allowed the client to be their own aggregator and distributor – companies such as FIS, Fiserv, SunGard, SAS, Jack Henry, SS&C, Advent and many others – along with service companies such as Blackrock Solutions. The current wave is all about adding analytics to all of the above.  It’s not really new – there have always been  analytical components to fintech. But it has gotten heightened importance as a differentiating factor as increases in bandwidth, mobile computing power, the cloud and big data tools have offered more potential. Add to these the ability to push analytics downstream to individuals and we have a whole new market. It never gets dull and it never gets any simpler.

The report that follows is intended to bring a focus to the m&a values and trends in the seven sectors of the fintech industry that we have followed and sometimes led for more than 14 years. It’s a strong market that shows no sign of slowing. You will see the details on sector performance as well as details on some of the more notable recent transactions, a few of which include:

  • The Carlyle Group (Washington, D.C.) acquired a minority stake in Ion Investment Group for $400mm,
  • Blackboard Inc. (Washington, D.C.) agreed to acquire Higher One Holdings for $260mm, valuing the company at an implied 1.7x LTM revenue,
  • Plaid Technologies (San Francisco, CA) raised $44mm in a Series B funding round led by new investor Goldman Sachs Investment Partners,
  • INTL FCStone Inc. (NASDAQ:INTL) agreed to acquire the securities clearing and independent wealth management businesses of Sterne Agee Group,
  • Broadridge (NYSE:BR) acquired 4Sight Financial Software for an undisclosed sum,
  • Markit (NasdaqGS:MRKT) agreed to acquire Prism Valuation for an undisclosed sum.

P.S. The publication date on my book, The Marine Corps Way to Win on Wall Street  is fast approaching. More info on the book is HERE; the SlideShare is HERE; and my latest blog post is HERE

Sincerely,

Ken

Ken Marlin

Ken Marlin

Ken Marlin is Managing Partner and Founder of Marlin & Associates and the author of "The Marine Corps Way to Win on Wall Street: 11 Key Principles from Battlefield to Boardroom" (St. Martin's Press 2016).

Over the course of more than 30 years Ken has advised scores of U.S. and international middle-market technology enabled firms on the best ways to buy, sell, grow and thrive. Along the way, he's been an entrepreneur (three times), a tech company CEO (twice), a senior corporate executive (twice) and an investment banker.

Seventeen years ago, Ken embarked on a journey to create a different sort of investment bank - one that would meld the investment banking skills he learned over 20 years on Wall Street with lessons he learned as a tech entrepreneur and the principles he learned during the decade he spent on active duty as a U.S. Marine Corps infantry officer. Today, Marlin & Associates is one of the most active M&A advisers in the information technology arena.

Institutional Investor Magazine has five times named Ken as one of II’s “Tech 50” and the II “FinTech 35” - both of which honor the most influential figures in the financial technology data and analytics sector.

Outside the office, Ken is a trustee of the Madison Square Boys and Girls Club, which serves underprivileged kids throughout the five counties of New York City; and an active supporter of the Phoenix House Foundation, The Wall Street Warriors Foundation, The Marine Corps Heritage Foundation, University of the People, the Hurricane Island Outward Bound School, and Outward Bound Peacekeeping.

Ken’s book has garnered strong reviews and is consistently ranked among the top in governance, finance and leadership. One reviewer called it a compelling vision to improve Wall Street by returning to solid core values like taking the long view, behaving with honor, delivering excellence and working for a cause greater than money.

Ken earned a BA from the University of California (Irvine), an MBA from UCLA, and a post-MBA Advanced Professional Certificate in Corporate Strategy from New York University. He lives in New York City with his wife, daughter, a dog, a cat and turtle.

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