Deal activity in fintech market defies broader M&A slowdown

19 September 2022 Consultancy.uk 2 min. read

Despite a broader slowdown in mergers & acquisitions activity, dealmaking in the financial technology landscape (fintech) remained strong in the first half of the year, according to a report by Hampleton Partners.

The report by the international M&A and corporate finance advisory firm found that fintech rose sharply in the first half of 2022 with 591 recorded deals, a 46 per cent increase on the same period the year previous, and massive 70 per cent increase on pre-pandemic figures (348 deals in the first half of 2019).

Deal activity was driven by new technologies that are rapidly gaining ground in the fintech scene, with the crypto and blockchain segment for instance recording a 75 per cent growth year over year.

Total number of deals & valuation multiples in Fintech per half-year, 2015-2022

“Fintech is proving to be a very attractive target for financial and strategic dealmakers, defying the broader global M&A slowdown,” said Miro Parizek, founder and principal partner at Hampleton Partners.

According to Parizek, demand is lifted by two developments that are coming together.

On the one side, a growing number of fintechs are seeking to raise funding, either because they are running out of money or because they are seeking to capitalise on the current environment and fuel further growth. “Their options will be to raise capital from venture capital firms; sell to private equity or to strategic acquirers.”

“At the same time, public companies with massive capital and private equity with large amounts of dry powder, well financed late-stage high-growth private companies, and traditional financial services companies  looking to remain relevant, are on the lookout for good assets in the sector.”

“These two sides of the equation are bound to increase overall merger & acquisition activity in the fintech sector.”

Meanwhile, valuations remained steady: the first half of 2011 saw the trailing 30-month median revenue multiple at 3.1x – broadly in line with the levels seen in the past two years.

Parizek: “The availability of capital is driving buyers and investors to increase their acquisitions at a time when their pockets are full and high-growth fintech companies are being sold at all-time affordable prices. Any potential recession won’t dampen fintech merger & acquisition as it did during the global financial crisis.”