Financial Technology, Data, and Analytics

Dear Clients and Friends:

Our August report on m&a values and trends among middle market FinTech, Data and Analytics companies is HERE. It’s all about optimism – as deal flow continues five months into lockdowns, school closures, political gridlock, trade wars, social unrest, market volatility, economic uncertainty, and a global pandemic that doesn’t seem to be going away.

We are mindful of the grave damage the current situation is causing to thousands of businesses and millions of furloughed employees worldwide – not to mention those killed, injured or otherwise affected by COVID-19. Last month, when we learned that 17 million Americans are still out of work and that the U.S. economy shrank by a mind-boggling 9.5 percent from April through June – the sharpest decline since records were kept – we weren’t surprised. We can see the shuttered shops. What does surprise us is that buyers, investors, customers, and others do not seem to be deferring transaction discussions until the future becomes clearer. Some of that is happening. But not nearly as much as we once feared.

As you will see in this REPORT, m&a multiples in the 11 segments of the FinTech, Data of and Analytics world that we follow – and sometimes lead – have largely rebounded – as has m&a deal volume among midsized firms. (Overall, deal volume was up 10.6% in the US for the first half of the year – even as total deal value was down nearly 70%. That is a sign of substantial mid-market activity.)   

We continue to see buyers, sellers and investors willing and eager to transact. There may be some increased aversion to risk among some: more “earnouts”, less interest in assigning sky-high values to very early opportunities. But overall, we see continued optimism for the future of middle market companies. The focus now is on 2022. The optimism is contagious.

We are no longer predicting when we will be back in our offices. We’re taking it month-by-month. Our strength is not in our pretty office space (although I do like it). It is imbedded in our team’s 18 years of unrelenting focus, experience, execution expertise, global reach, intellectual horsepower, and track record of success. (It doesn’t hurt that all of our tools are in the cloud.) So, we will just keep working our way towards the light we think we see near the end of this very long tunnel. We’re pretty sure it is not an oncoming train.

As you will see in our latest REPORT, m&a activity – and optimism – among FinTech, Data and Analytics firms is still alive. A few of the more interesting transactions over the past month include:

• Empower Retirement agreed to acquire Personal Capital for $1bn (Wealth Tech)
• Black Knight agreed to acquire Optimal Blue for $1.8bn (Real Estate Tech)
• TransferWise raised $319mn in a secondary share sale led by D1 Capital Partners and Lone Pine Capital (Payments Tech)
• Insurity agreed to acquire Virtual MGA for an undisclosed sum (InsurTech)