HW Financial Technology Introduction
Harris Williams (“HW”)
- 25+ years and more than 1,000 closed transactions
- 350+ professionals across eight office globally
- 170+ closed transactions in the last 24 months
- 10 industry groups
Focused Advisory Services
- Mergers and acquisitions (M&A)
- Capital raises
- Corporate divestitures
Consistent Recognition for Quality
HW Technology, Media & Telecom (“TMT”) Group
- 35+ dedicated TMT professionals
- TMT offices include Boston, San Francisco, and London
Key TMT Themes
- SaaS / Cloud
- Data & Analytics
- Digital Transformation
- A.I. / Machine Learning
Horizontal Focus Sectors
- Application Software
- Cloud Managed Services and Hosting Solutions
- Compliance Solutions
- CRM and Marketing Automation
- Human Capital Management
- Infrastructure and Security Software
- IT and Tech-Enabled Services
- Marketing, Research, and Insights Software
Vertical Focus Sectors
- Architecture, Engineering, and Construction Software
- Education Technology and Services
- Energy Technology
- Facilities and Real Estate Software
- Financial Technology and Payments
- Government Technology
- Healthcare IT
- Industrial and Supply Chain Technology
- Internet and eCommerce
- Retail Technology
Financial Technology Taxonomy
Enterprise and Commercial
Solutions focused on supporting B2C and B2B payments and financial activity and serving the financial needs of enterprises of all sizes
- Office of the CFO
Select Market Participants
Solutions focused on serving the specific operational and compliance needs of banks, insurance companies, and asset managers
- Asset Mgmt. / Trading
Solutions focused on delivering improved financial and payment experiences, personal wealth management, and access to consumer loans
- Personal Finance
Select Market Participants
Select Recent HW Financial Technology Transactions
Provider of an all-in-one, cloud-based marketing automation platform for financial professionals, broker dealers, insurance agents, and enterprises
Provider of SaaS property and investment management software solutions for the residential and commercial real estate markets
Provider of business management and revenue cycle management (RCM) services to the health and wellness, child care, insurance, and leisure and attraction verticals
Provider of integrated risk management, policy administration, and insurance claims management software solutions
Provider of a SaaS platform serving single- family and condo high-rise associations with unified property management, resident portals, accounting, payments, and security solutions
Provider of e-learning, workforce management, and compliance solutions to enterprises and professionals across financial services, healthcare, and real estate
Provider of integrated software, data, and analytics solutions to the global energy market, including financial services, capital markets, and trading and risk professionals
Provider of member management software and payment processing solutions for fraternal organizations and nonprofits
Case Study: FMG Suite
FMG Suite Overview
FMG Suite is a leading, cloud-based marketing automation platform for financial professionals, broker dealers, insurance agents, and enterprises. More than 40,000 financial professionals use FMG Suite every day to engage with clients and prospects to grow their businesses.
Key Investment Highlights
- Leading all-in-one cloud-based marketing automation platform for financial professionals
- Highly scalable SaaS solution provides high ROI value proposition
- Turnkey solution combines websites, marketing automation, and traditional marketing tools
- Compelling financial profile with high recurring revenue and profitability
- Underpenetrated market opportunity supported by favorable secular trends
- Industry compliance requirements provide a material barrier to entry
- Proven management team with deep domain and acquisition expertise
- Competitive process with strategic, quasi-strategic, and financial sponsor involvement
- Buyers primarily interacted with Management on a virtual basis, with a select few number of parties having met with Management in-person pre-COVID
- Aurora Capital Partners delivered a fully baked LOI after completing all business, legal, tax, and other diligence
FMG’s Proprietary Marketing Automation Platform
Thoma Bravo’s Take-Private of Majesco
- Majesco is a leading provider of cloud-based core software solutions for the insurance industry, offering distribution management, data and analytics, and digital engagement.
- Majesco serves over 200 customers ranging from large, global insurance carriers to mid-market insurers, MGAs, startups, mutual, and regional carriers.
- Thoma Bravo’s take-private deal was an opportunity to expand its investments in tech-enabled services and will enable Majesco to invest significantly in accelerating growth.
Clearlake’s Acquisition of Zywave
- Zywave is a leading provider of mission-critical, cloud-based insurance distribution software, streamlining and automating key revenue-generating activities including sales, renewals, and quote delivery, as well as content generation, data tracking, and analytics.
- Zywave serves over 6,000 brokerages, including the top 100 U.S. insurance firms.
- Clearlake’s acquisition will further enable Zywave to continue acquisitions in adjacent areas, building on recent purchases of miEdge, RateFactory, Code SixFour, and HR360 as it seeks to expand its offerings.
ICE’s Acquisition of Ellie Mae
- Ellie Mae is a provider of cloud-based mortgage workflow solutions to automate and digitize the residential mortgage process, with solutions that address origination, closing documents, and ongoing compliance.
- Ellie Mae has over 3,000 clients across the residential mortgage ecosystem, and its solutions are used to process over 40% of U.S. mortgage originations annually.
- Ellie Mae will be merged into ICE Mortgage Services, strengthening existing end-to-end digital mortgage offerings built on ICE’s 2016 acquisition of MERS and 2018 acquisition of Simplifile.
American Express’s Acquisition of Kabbage
- Kabbage is an automated online cash flow solution and payments platform for small businesses that leverages real-time data to understand performance and underwrites flexible solutions including lines of credit, business checking, and payments management.
- Kabbage users are able to deposit cash across a network of over 90,000 retailers and service centers, and the Company’s heavy involvement in the recent PPP stimulus program has made it the third largest PPP lender by volume with over 225,000 loans for $6B.
- The addition of Kabbage to the American Express platform deepens American Express’s offerings to its millions of small business customers across the U.S., and gives it access to a unique data-driven view on small American Express business performance.
Roper’s Acquisition of Vertafore
- Vertafore provides cloud-based agency management software that fully integrates applications across the property and casualty insurance distribution channel, enabling data-driven decisions to both capitalize on growth opportunities and reduce compliance risks.
- Vertafore’s solutions are used by over 20,000 agencies, 1,000 carriers, 23 state governments, and 500,000 insurance professionals.
- The Vertafore acquisition is Roper’s largest to date and follows on its 2019 acquisition of iPipeline, a life insurance-oriented software platform, bolstering its presence in the insurance market. Both firms will continue to operate independently and fit within Roper’s broader Application Software platform.
Financial Technology Acquisition Activity
Most Active Strategic Acquirers of Fintech Assets by Volume2
- The 10 most active strategic fintech consolidators have acquired over 100 companies since 2016.
- Through the third quarter of 2020, nine of the top 10 most active strategics made at least one acquisition, including SS&C and Global Payments, each of which has made three acquisitions year-to-date.
Global Financial Software M&A Activity2
- 127 M&A transactions closed in Q3 2020 across financial software, with strategic acquirers representing 75% of total deal volume.
- Strategic acquirers continue to outpace private equity as the race for wallet share and additional payment volumes remains front of mind for many decision-makers.
- Despite market volatility, fintech continues to be a bright spot as digitization accelerates.
Enterprise and Commercial Market Observations1
Payment networks that facilitate next-generation payment channels continue to benefit from accelerating migration of payments to digital environments, a trend that will be magnified by the ongoing COVID-19 pandemic.
Payment networks are increasingly focused on growing payment volumes by enhancing their solution offerings to deliver fast, frictionless, and secure payment processing across end markets and geographies.
The payment processing landscape is undergoing significant change as incumbents seek to maintain market share through consolidation and improvements to merchant and consumer user experiences.
As payments continue to shift to digital platforms, software providers are keen to improve their competitive positions and gather better customer data by incorporating processing functionality directly into their solutions.
B2B payments continue to be a key focus area for businesses globally as they seek to optimize their supply chains with software, particularly in light of the current macro environment, driving demand for solutions that improve processes and reduce payment friction.
Businesses continue to adopt solutions that improve collections and settlement, increase transparency across their entire ecosystems, and improve regulatory compliance.
As financial services become increasingly digital, industries and regulators continue to implement stringent and expensive compliance requirements that are driving the adoption of software and AI solutions to automate data collection and meet compliance demands.
Heightened awareness of—and focus on—privacy and data protection in the digital age is making innovative solutions that offer superior security measures a strategic imperative for businesses across industries.
Enterprises across all markets continue to transition from legacy offerings to modern cloud-based solutions that improve operational efficiency, are user friendly for a youthful workforce, and are capable of delivering solutions to evolving industries and can be easily tailored for evolving work environments, as highlighted by the rapid increase in employees working from home during COVID-19.
Incumbents and challengers alike continue to acquire solutions that expand their total addressable market (TAM) and enable them to offer more closely integrated workforce management and benefits administration solutions across industries.
Institutional and Consumer Market Observations1
Traditional financial institutions continue to acquire, partner with, and implement next-generation technology solutions across back-, middle-, and front-office functions to compete with specialized digital offerings.
Digital-native banking platforms that offer consumers flexible and convenient products are gaining prominence, putting additional pressure on incumbents, particularly as consumer loyalty remains low and physical footprint becomes less important to younger generations.
Insurance carriers and underwriters are increasingly focused on digitizing the customer journey to enable personalized and contextual interactions with policyholders and prospects across all channels to increase customer acquisition and to lower costs.
Similar to the disruption occurring in the banking sector, digital-native and vertical-specific platforms continue to attract customers and put increasing pressure on traditional insurance providers and market rates.
AMT organizations continue to seek software solutions that enhance returns with powerful research tools using data and analytics, improve liquidity and access to capital, and streamline investor relations functions, allowing managers to focus on investing.
Wealth managers and financial advisors continue to use partnerships and M&A to achieve scale and fend off online investment platforms and robo-advisors, and to slow the flow of capital moving into passive funds.
Consumer utilization of peer-to-peer payment solutions—especially those facilitated through mobile platforms—has given rise to a number of innovative offerings and has forced incumbents to acquire or launch frictionless solutions to keep pace.
Growing demand for peer-to-peer transfers continues to drive down costs as providers of all sizes compete to monetize rapidly growing payment volumes.
Persistently low rates and a strong macroeconomic environment have inhibited growth in alternative lending/investing platforms; however, the COVID-19 pandemic could prove to be a catalyst for demand.
Marketplace lending has become increasingly specialized as niche players offering vertical-specific solutions and expertise have successfully attracted new customers, despite being in the early stages of maturity.
*OnDeck reached a definitive agreement to be acquired on July 28, 2020