Observations on Key Fintech Trends

  • The financial technology market continues to attract strong interest from financial investors and strategic acquirers alike, with 700+ M&A transactions completed in the last 12 months globally
  • Consolidation has accelerated as the sector matures and is expected to continue as fintech market leaders reach scale and look to pursue inorganic add-on opportunities, or become part of larger entities themselves
  • Payment processors are positioning for market share in an expanding global opportunity, and continue to seek opportunities to differentiate their solutions as payments continue to migrate online and into industry-specific software driven environments, exemplified by two blockbuster deals that fundamentally change the payment processing landscape that were announced in Q1’19
  • Technology companies are increasingly seeking to integrate billing and payments directly into their solutions to both improve end-user experience and to capture incremental economics from financial management and payment processing
  • Corporations globally are eager to optimize B2B transactions and are investing in cloud-based software solutions that improve procurement, supply chain, and settlement activities, as well as working capital exchanges that streamline corporate finance functions
  • The banking and insurance industries are undergoing significant transformation as financial institutions adopt software solutions to defend against competitive unbundled offerings, improve operational workflows, and enhance client experience across business lines
  • Consumer adoption of digital and mobile payment and financial services solutions has accelerated globally as the proliferation of smartphones, digital currency, and digital native banks make online transaction increasingly frictionless, secure, and convenient

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

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  • Payments
  • Insurance
  • Asset Mgmt./Trading

 

Select Market Participants

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Institutional

Solutions focused on serving the specific operational and compliance needs of banks, insurance companies, and asset managers

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  • Banking
  • Insurance
  • Asset Mgmt./Trading

 

 

Select Market Participants

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Consumer

Solutions focused on delivering improved financial and payment experiences, personal wealth management, and access to consumer loans

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  • Payments
  • Personal Finance
  • Investing

 

 

Select Market Participants

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Select Recent HW Financial Technology Transactions

screen_shot_2019-04-18_at_5.17.53_pm.pngProvider of next generation integrated digital government software and payment solutions, designed to improve government operations, revenue collection, and citizen engagement

 

 

 

screen_shot_2019-04-18_at_5.18.21_pm.pngProvider of eLearning, workforce management, and compliance solutions to enterprises and professionals across financial services, healthcare, and real estate

 

 

 

screen_shot_2019-04-18_at_5.18.48_pm.pngProvider of mental and behavioral health practice management, revenue cycle management, billings, and integrated payment processing solutions

 

 

 

 

screen_shot_2019-04-18_at_5.19.14_pm.pngProvider of integrated software, data and analytics solutions to the global energy market including financial services, capital markets, and trading and risk professionals

 

 

 

screen_shot_2019-04-18_at_5.19.42_pm.pngProvider of member management software and payment processing solutions for non-profit organizations, camps, and sports leagues

 

 

 

 

screen_shot_2019-04-18_at_5.20.12_pm.pngProvider of integrated SaaS civic engagement and payment solutions for government entities

 

 

 

 

screen_shot_2019-04-18_at_5.20.38_pm.pngProvider of integrated SaaS, insurance, and payments solutions for residential and commercial property managers

 

 

 

 

screen_shot_2019-04-18_at_5.21.12_pm.pngProvider of youth sports management software and integrated payments solutions

 

 

 

 

screen_shot_2019-04-18_at_5.21.37_pm.pngProvider of integrated payments and member management solutions for faith-based and non-profit organizations

 

 

 

 

screen_shot_2019-04-18_at_5.22.04_pm.pngProvider of integrated SaaS and payment solutions for health clubs and fitness centers

Case Study: PayIt

HW’s TMT Group advised PayIt on its strategic investment from Insight Partners.

screen_shot_2019-04-18_at_2.44.11_pm.pngCompany Overview

PayIt is a leading provider of next generation, integrated digital government software and payment solutions, designed to improve government operations, revenue collection, and citizen engagement.

Through its highly configurable and extensible rules-based SaaS platform, PayIt improves the way citizens interact with government by simplifying the maze of government agencies to provide users with an intuitive, contextual experience.

The Company’s solution seamlessly integrates across existing technology infrastructure to connect disparate systems and data, making government smarter, modern, and more convenient for all constituents.

Relevant Sub-Sectors

  • Financial Technology
  • Government Technology
  • SaaS
  • Mobile

Enterprise & Commercial Market Observations1

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Institutional & Consumer Market Observations1

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Select Technology Services M&A Transactions1

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Fiserv’s pending acquisition of First Data | Payment Processing

  • First Data is a global financial services company that specializes in merchant acquiring technology to facilitate payment acceptance and processing for over six million businesses
  • First Data serves enterprise customers in 118 countries and processes over 2,500 financial transactions per second, resulting in over $2.4 trillion of processed payment volume annually
  • The highly complementary combination is expected to generate approximately $900 million in run-rate cost synergies and over $500 million in revenue synergies, along with over $4 billion of free cash flow in the near-term
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Thoma Bravo’s Pending Take Private Acquisition of Ellie Mae | Banking

  • Ellie Mae is a leading cloud-based provider of workflow solutions for the mortgage finance industry designed to streamline and simplify the lending and home buying process
  • Ellie Mae’s software and technology solutions are utilized by over 240,000 mortgage professionals to complete over 20 million transactions and close over 2.5 million loans annually
  • Thoma’s $3.7 billion acquisition represents a nearly 50% premium to the 30-day average share price, highlighting the significant opportunity to continue to improve and automate digital mortgage origination solutions through increased investment
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Global Payments’ Acquisition of Sentral Education | Payment Processing

  • Sentral Education is a cloud-based student information system that streamlines administrative workflows and student management solutions, including integrated billing and payments
  • Sentral Education, headquartered in Sydney, Australia, serves over 3,000 schools across Australia and offers modules for administration, attendance, assessment, reporting, payments, and parent portals
  • Global’s acquisitions represents a continuation of its strategy to bolster its software-driven payment capabilities while expanding its vertical reach and broadening its geographic footprint
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FLEETCOR’s Acquisition of Nvoicepay | B2B Transactions

  • Nvoicepay is a leading provider of cloud-based B2B payment and accounts payable automation solutions for enterprises that enable them to pay their customers electronically
  • Nvoicepay integrates seamlessly into existing ERP systems to streamline supplier payments, serving over 400 businesses globally through network connections to some of the largest enterprises, including Amazon, FedEx, and ADP
  • FLEETCOR’s acquisition expands its B2B capabilities and follows several related recent acquisitions that make FLEETCOR one of the most comprehensive AP automation software providers globally
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FIS’ Acquisition of Worldpay | Payment Processing

  • Worldpay is a leading provider of payment processing technology and services, including card present, online, and contactless payments that enable merchants to accept payments across channels and geographies
  • Worldpay, which merged with Vantiv in 2018, processes over $1.6 trillion in payment volume across over 42 billion transactions annually and serves merchants in over 145 countries
  • The combination marks further consolidation within the payment processing landscape and greatly expands FIS’ capabilities within merchant acquiring and processing services, while broadening Worldpay’s distribution footprint

Financial Technology Acquisition Activity

Most Active Strategic Acquirers of Fintech Assets by Volume2

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  • The 10 most active strategic fintech consolidators have acquired over 95 companies since 2015.
  • This group completed four fintech acquisitions in the first quarter of 2019, in-line with Q1 2018 activity levels.
  • Established vendors are aiming to drive scale, augment their capabilities, limit disintermediation, and capture internal operational efficiencies.

Global Financial Software M&A Activity2

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  • Across financial software, there were 142 M&A transactions closed in Q1 2019, with private equity transactions representing 34% of total deal volume.
  • Strategic acquirers pursued targets at a more normalized pace in terms of number of transactions, but are more aggressively seeking transformative assets of scale, evidenced by the two blockbuster deals announced in Q1 2019, Fiserv’s acquisition of First Data, and FIS’ acquisition of Worldpay.

 

Enterprise & Commercial Solutions – Landscape

Representative Enterprise & Commercial Solution Providers

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Vertical Specific Payments Solutions – Landscape

Representative Vertically-Focused Integrated SaaS and Payments Providers

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Key Themes for Vertical-Specific Payments

  • Emergence of digital payment gateways and card not present transactions.
  • Software vendor addition of payment facilitator (PayFac) models.
  • Increasing subscription and recurring payments in B2C and B2B environments.
  • Time sensitive and/or convenience driven.
  • Payment processing bundled with software-based sale.
  • Regulatory specific reporting and compliance.
  • Meaningful payment processing volumes.

Enterprise & Commercial Solutions – Trading Comparables

Valuation1

As of March 29th, 2019 ($ in millions)​

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Enterprise & Commercial Solutions – Transaction Activity

Select Recent M&A Transactions

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Select Recent Private Placement Transactions

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Institutional Solutions – Landscape

Representative Institutional Solution Providers

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Institutional Solutions – Trading Comparables

Valuation1

As of March 29th, 2019 ($ in millions)​

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Institutional Solutions – Transaction Activity

Select Recent M&A Transactions

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Select Recent Private Placement Transactions

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Consumer Solutions – Landscape

Representative Consumer Solution Providers

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Consumer Solutions – Trading Comparables

Valuation1

As of March 29th, 2019 ($ in millions) 

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Consumer Solutions – Transaction Activity

Select Recent M&A Transactions1

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Select Recent Private Placement Transactions2 

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M&A advisor of choice for leading TMT companies.

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1. FactSet

2. PitchBook

 

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