HW Financial Technology Introduction

Harris Williams (“HW”) as a Firm

  • Founded in 1991
  • 370+ professionals across eight offices globally
  • 170+ closed transactions in the last 24 months
  • 21st record year in 2018
  • 10 industry groups

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Technology, Media & Telecom (“TMT”) Group

  • 35+ professionals across Boston, San Francisco, and London
  • 42 closed transactions in the last 24 months

Horizontal Focus Sectors:

  • Compliance Software
  • CRM and Member Management Software
  • Data and Analytics
  • Enterprise Software
  • Human Capital Management
  • Infrastructure and Security Software
  • IT and Tech Enabled Services
  • Managed Services, Hosting, Data Center Solutions
  • Online Marketing, Data, and Research

Vertical Focus Sectors:

  • Architecture, Engineering, and Construction
  • eCommerce and Retail Software
  • Education Technology
  • Energy Technology
  • Facilities and Real Estate Technology
  • Financial Technology
  • Government Technology
  • Healthcare IT
  • Industrial and Supply Chain Software

Observations on Key Fintech Trends

  • The financial technology market continues to attract strong interest from financial investors and strategic acquirers alike, with more than 550 M&A transactions completed in 2019 globally
  • Consolidation persists as the sector matures and is expected to continue as fintech market leaders reach scale and look to pursue inorganic add-on opportunities to acquire customer relationships and grow payment volumes
  • Online banking and payments companies continue to experience rapid growth lead by Zelle, which now facilitates P2P payments for 21 of the 27 largest banks in the U.S., and Chime, which grew from 4 million accounts in June to 6.5 million accounts by year-end
  • 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 payment processing, creating a significant opportunity for companies offering to outsource specialized fintech infrastructure for their customers
  • Corporations globally are eager to optimize B2B transactions and automate traditional finance functions by leveraging the ever expanding trove of data collected and generated by improving ERP systems, and are investing in cloud-based software solutions that improve procurement, AP automation, supply chain finance, and settlement activities, as well as working capital exchanges that enhance profitability
  • The banking and insurance industries continue to evolve as financial institutions increasingly adopt modern SaaS solutions to defend against competitive unbundled offerings, improve operational workflows, accelerate customer acquisition, and enhance client experience across business lines
  • Adoption of online and mobile 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 for consumers and a necessity for merchants seeking to improve their customer experience

Financial Technology Taxonomy

Enterprise and Commercial

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Solutions focused on supporting B2C and B2B payments and financial activity, and serving the financial needs of enterprises of all sizes

  • Payments
  • B2B Transactions
  • Financial Software

Select Market Participants

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Institutional

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

  • Banking
  • Insurance
  • Asset Mgmt. / Trading

Select Market Participants

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Consumer

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

  • Payments
  • Personal Finance
  • Investing

Select Market Participants

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Select Recent HW Financial Technology Transactions

screen_shot_2020-02-06_at_5.02.30_pm.pngProvider of business management and revenue cycle management (RCM) services to the health and wellness, child care, insurance, and leisure and attraction verticals

 

 

screen_shot_2020-02-06_at_5.02.58_pm.pngProvider of integrated risk management, policy administration, and insurance claims management software solutions

 

 

screen_shot_2020-02-06_at_5.03.39_pm.pngProvider of a SaaS platform serving single family and condo high rise associations with unified property management, resident portals, accounting, payments, and security solutions

 

 

screen_shot_2020-02-06_at_5.04.11_pm.pngProvider of next generation integrated digital government software and payment solutions, designed to improve government operations, revenue collection, and citizen engagement

 

 

screen_shot_2020-02-06_at_5.04.37_pm.pngProvider of eLearning, workforce management, and compliance solutions to enterprises and professionals across financial services, healthcare, and real estate

 

 

screen_shot_2020-02-06_at_5.05.10_pm.pngProvider of mental and behavioral health practice management, revenue cycle management, billings, and integrated payment processing solutions

 

 

screen_shot_2020-02-06_at_5.05.41_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_2020-02-06_at_5.06.12_pm.pngProvider of member management software and payment processing solutions for fraternal organizations and non-profits

 

 

screen_shot_2020-02-06_at_5.06.44_pm.pngProvider of integrated SaaS civic engagement and payment solutions for government entities

 

 

screen_shot_2020-02-06_at_5.07.12_pm.pngProvider of integrated SaaS, insurance, and payments solutions for residential and commercial property managers

Case Study: Receipt Bank

HW’s TMT Group advised Receipt Bank on its $73 million Series C Capital Raise from Insight Partners, Augmentum Fintech, Kennet Partners, and Canadian Imperial Bank of Commerce.

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Company Overview

Receipt Bank is a leading provider of a digital bookkeeping platform for SMBs and professional accountants, offering proprietary machine learning technology that fully automates workflows across bookkeeping and accounting functions.

The Company’s SaaS, AI-powered bookkeeping provides market-leading accuracy, scale, and speed, saving SMBs and bookkeepers hundreds of hours of administrative work and enabling them to focus on their business and drive revenue.

Receipt Bank serves the $500 billion global accounting and bookkeeping services market and partners with more than 9,000 bookkeeping and accounting firms to serve over 300k SMBs.

Relevant Sub-Sectors

  • SaaS
  • Financial Technology
  • Vertical Software

Enterprise & Commercial Market Observations1

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Institutional & Consumer Market Observations1

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Select Financial Technology M&A Transactions1

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RealPage’s Acquisition of Buildium

  • Buildium is a provider of property management software including accounting, leasing, and rental and utility payments solutions
  • Buildium serves over 17,000 customers and manages over two million residential units around the globe
  • Buildium’s suite of solutions will provide RealPage access to smaller multi-family developments, and the single-family and Home Owner’s Association (HOA) markets

 

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PayPal’s Acquisition of Honey Science

  • Honey is a leading technology platform for online shopping discounts, price-tracking, and rewards that operates as a popular browser extension application
  • Honey seamlessly integrates with thousands of online retailers including Amazon, Ebay, and Expedia and has over 17 million monthly active users
  • Leveraging PayPal’s worldwide network of thousands of consumers and merchants will help to improve the user experience for all Honey users while increasing sales and customer engagement for PayPal merchants

 

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Medius’ Acquisitions of Wax Digital

  • Wax Digital is a provider of e-procurement, accounts payable automation, and supplier management software solutions for the global retail, travel and hospitality, financial services, healthcare, construction, and manufacturing industries
  • Wax Digital has deployed its solutions across 102 countries in 14 languages to 260,000 users managing $30B of spend annually and has consistently achieved 98%+ customer renewal rates
  • The combined entity will have 350 employees across North America, Europe, and Oceania and will offer a comprehensive source-to-pay suite allowing customers to identify and track savings opportunities and find suppliers

 

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Ellie Mae’s Acquisition of Capsilon

  • Capsilon is a provider of document management and mortgage automation solutions for lenders, investors, and servicers
  • Capsilon processes an estimated 15% of all U.S. mortgages, equating to about $400 billion in loan volume in 2018, for over 160 customers including 3 of the top 10 mortgage lenders
  • Capsilon’s AI driven data automation and validation solutions will expand Ellie Mae’s existing suite of end-to-end mortgage automation tools

 

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Zelis’s Merger with RedCard

  • RedCard and Zelis are leading providers of financial technology and payment processing solutions for the global healthcare market
  • The combined firm will process claims for 700 payers and over 600,000 providers across the healthcare landscape
  • Both firms have a common investor base and compete in the same markets, making a merger a logical next step to expand scale, accelerate growth, and improve customer experience

Financial Technology Acquisition Activity

Most Active Strategic Acquirers of Fintech Assets by Volume

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  • The 10 most active strategic fintech consolidators have acquired over 100 companies since 2015.
  • This group completed 24 fintech acquisitions in 2019, with 5 of the 10 meeting or exceeding their 2018 deal count.

Global Financial Software M&A Activity2

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  • Across financial software, there were 122 M&A transactions closed in Q4 2019, with private equity transactions representing 35% 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.

Enterprise & Commercial Solutions – Landscape

Representative Enterprise & Commercial Solution Providers

Vertical Software and Payments Ecosystem

Enterprise & Commercial Solutions – Trading Comparables

Valuation1

As of December 31st, 2019 ($ in millions)​

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Enterprise & Commercial Solutions – Transaction Activity

Select Recent M&A Transactions1

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Select Recent Private Placement Transactions2

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Institutional Solutions – Landscape

Representative Institutional Solution Providers

Institutional Solutions – Trading Comparables

Valuation1

As of December 31st, 2019 ($ in millions)

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Institutional Solutions – Transaction Activity

Select Recent M&A Tranactions1

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Select Recent Private Placement Transactions

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Consumer Solutions – Landscape

Representative Consumer Solution Providers

Consumer Solutions – Trading Comparables

Valuation1

As of December 31st, 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

 

The information and views contained in this report were prepared by Harris Williams LLC (“Harris Williams”). It is not a research report, as such term is defined by applicable law and regulations, and is provided for informational purposes only. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any securities or financial instruments or to participate in any particular trading strategy. The information contained herein is believed by Harris Williams to be reliable but Harris Williams makes no representation as to the accuracy or completeness of such information. Harris Williams and/or its affiliates may be market makers or specialists in, act as advisers or lenders to, have positions in and effect transactions in securities of companies mentioned herein and also may provide, may have provided, or may seek to provide investment banking services for those companies. In addition, Harris Williams and/or its affiliates or their respective officers, directors and employees may hold long or short positions in the securities, options thereon or other related financial products of companies discussed herein. Opinions, estimates and projections in this report constitute Harris Williams’ judgment and are subject to change without notice. The securities and financial instruments discussed in this report may not be suitable for all investors and investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives. Also, past performance is not necessarily indicative of future results. No part of this material may be copied or duplicated in any form or by any means, or redistributed, without Harris Williams’ prior written consent.

Harris Williams LLC is a registered broker-dealer and member of FINRA and SIPC. Harris Williams & Co. Ltd is a private limited company incorporated under English law with its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales (registration number 07078852). Harris Williams & Co. Ltd is authorized and regulated by the Financial Conduct Authority. Harris Williams & Co. Corporate Finance Advisors GmbH is registered in the commercial register of the local court of Frankfurt am Main, Germany, under HRB 107540. The registered address is Bockenheimer Landstrasse 33-35, 60325 Frankfurt am Main, Germany (email address: hwgermany@harriswilliams.com). Geschäftsführer/Directors: Jeffery H. Perkins, Paul Poggi. (VAT No. DE321666994). Harris Williams is a trade name under which Harris Williams LLC, Harris Williams & Co. Ltd and Harris Williams & Co. Corporate Finance Advisors GmbH conduct business.