Financial Technology, Data, and Analytics

Dear Clients and Friends:

As you will see in the report that follows, the state of m&a market among midsize companies in the financial technology, data and analytics world we serve is strong. It seems as if we always say that. It’s a bit like the President of the US telling assembled congressional leaders each year that “The State of Our Union is Strong” – no matter what is happening with wars, trade, inflation, poverty, unemployment, social unrest, etc. It’s usually true. The State of our Union and our industry often seems so diverse, resilient and strong that we can pass off most of those things as diversions on the road to success.

Some say this strength is due to a culture of innovation and perseverance in the face of adversity. Some say it’s technology-driven, as new tools allow people to do ever more, at ever lower cost. Some say it’s driven by capitalists, flush with cash, who are willing to take risks. Some say it’s because investors don’t have better opportunities. Whatever the cause, opportunities in our country and our industry look strong and that has led to strong m&a values. 

There are always risks. Gold, often seen as a hedge against inflation – or risk – is up 25% this year, while inflation is less than 2%. US gun sales are up more than 50% – and the cost of ammunition is up more than 200% – if you can find any. It’s a strange time. Investors see the global pandemic that has left more than one million dead worldwide (including 215,000 in the US); they see unemployment rates that are unconscionable – and affect the bottom 25% of the heap way more than those in the top 75%; they see social unrest or political malfeasance. But they also believe that the state of our union is broad, diverse, complex – and strong. We’ll hope that the collective wisdom is prescient.

As you will see in our latest report, m&a values in the 11 segments of the Fintech, Data and Analytics markets that we serve have done nothing but strengthen over the past few months. It helps that equity markets are at all-time highs, interest rates are low, and customers are buying. Ascribe the causes as you will – we know that we are working on a pipeline of opportunities. A few of the more interesting transactions over the past month include:

• Snowflake raised $3bn in its IPO (Data & Analytics – Financial Services)
• Klarna raised $650mn in a PE funding round led by Silver Lake (Payments Tech)
• Affirm raised $500mn in a Series G funding round led by GIC and Durable Capital Partners (Wealth Tech)
• Gridiron Capital agreed to acquire AML RightSource for $427mn (Regulatory Tech)
• Neon raised $300mn in a Series C funding round led by General Atlantic (Bank Tech)
• PropertyGuru raised $219mn in a Private Equity funding round led by TPG and KKR (Real Estate Tech)

Ken