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
  • Blackstone’s announced sale of Refinitiv to the London Stock Exchange – less than a year after Blackstone carved the platform out of Thomson Reuters – serves to highlight how financial network providers continue to focus on delivering improved decision-making capabilities while further monetizing proprietary data assets derived from their clients’ network activities
  • The immediate-term viability of digital currencies and mainstream blockchain technology applications are called into question with PayPal, Visa, Mastercard, Stripe, and eBay all leaving Facebook’s Libra consortium simultaneously in late Q3 as the platform faces significant regulatory constraints  
  • 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
  • Corporations globally are eager to optimize B2B transactions 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 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

  • Payments
  • B2B Transactions
  • Financial Software

Select Market Participants

screen_shot_2019-10-22_at_1.12.41_pm.png

Institutional

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

screen_shot_2019-10-22_at_1.14.00_pm.png

Consumer

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

  • Payments
  • Personal Finance
  • Investing

Select Market Participants

screen_shot_2019-10-22_at_1.15.03_pm.png

Select Recent HW Financial Technology Transactions

screen_shot_2019-10-22_at_1.15.58_pm.pngProvider of integrated risk management, policy administration, and insurance claims management software solutions

 

 

 

screen_shot_2019-10-22_at_1.16.27_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_2019-10-22_at_1.16.54_pm.pngProvider of next generation integrated digital government software and payment solutions, designed to improve government operations, revenue collection, and citizen engagement

 

 

 

screen_shot_2019-10-22_at_1.17.25_pm.pngProvider of eLearning, workforce management, and compliance solutions to enterprises and professionals across financial services, healthcare, and real estate

 

 

 

screen_shot_2019-10-22_at_1.17.56_pm.pngProvider of mental and behavioral health practice management, revenue cycle management, billings, and integrated payment processing solutions

 

 

 

screen_shot_2019-10-22_at_1.18.27_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_2019-10-22_at_1.18.54_pm.pngProvider of member management software and payment processing solutions for fraternal organizations and non-profits

 

 

 

screen_shot_2019-10-22_at_1.19.23_pm.pngProvider of integrated SaaS civic engagement and payment solutions for government entities

 

 

 

screen_shot_2019-10-22_at_1.19.55_pm.pngProvider of integrated SaaS, insurance, and payments solutions for residential and commercial property managers

 

 

 

screen_shot_2019-10-22_at_1.20.22_pm.pngProvider of youth sports management software and integrated payments solutions

Government Technology: The Sleeping Giant Stirs

Industry Insights: Harris Williams’ TMT team shares its views on the increasingly active government technology sector in a recent article, highlighting the attractiveness of the integrated software and payments opportunities in the segment.

 

Sector Observations

Government agencies are under increasing pressure to modernize their IT systems, especially those serving today’s digital consumers. That’s opening up a $93 billion opportunity for technology vendors, and for the strategic buyers and financial investors that understand the space.

In this article, Managing Director Tyler Dewing and Vice President Scott Reinig, both of the Harris Williams Technology, Media & Telecom (TMT) Group, explain the key drivers of this shift and reveal one specific area creating noteworthy growth opportunities.

To receive a copy of Government Technology: The Sleeping Giant Stirs, please contact HW at TMT_Fintech@harriswilliams.com

Article Excerpt

“Modernizing payments is a quick win for both government agencies and technology vendors,” says Dewing. “For agencies, it delivers an almost instant and significant operational efficiency boost for employees and service improvement for the general public—without requiring a big-budget purchase. For vendors, it creates an attractive revenue model and enables those with a broad suite of solutions to get a foot in the door.”

govtech1.jpg

Recent HW GovTech Transactions

govtech2.jpg

Case Study: Ventiv Technology

HW’s TMT Group advised Tailwind Capital on its acquisition of Ventiv Technology.

screen_shot_2019-10-22_at_1.21.34_pm.png

Company Overview

Ventiv Technology is a leading provider of integrated risk management, policy administration, and insurance claims management software solutions that simplify and optimize risk and compliance management processes across organizations

Leveraging a highly scalable and uniquely configurable SaaS platform, the Company serves a diverse base of over 600 enterprise customers including self-insured corporations, public entities, and insurance carriers across multiple industry verticals

The Company’s claims management and policy administration solutions continue to benefit from double digit growth in investments by insurance carriers and self-insured corporations to manage claims costs and streamline policy administration processes

Relevant Sub-Sectors

  • Financial Technology
  • Governance, Risk, Compliance
  • Insurance Technology
  • Healthcare IT
  • SaaS

Enterprise & Commercial Market Observations1

screen_shot_2019-10-22_at_1.24.51_pm.png

screen_shot_2019-10-22_at_1.25.27_pm.png

screen_shot_2019-10-22_at_1.26.48_pm.png

screen_shot_2019-10-22_at_1.27.36_pm.png

screen_shot_2019-10-22_at_1.28.48_pm.png

Institutional & Consumer Market Observations1

screen_shot_2019-10-22_at_1.29.45_pm.png

screen_shot_2019-10-22_at_1.30.33_pm.png

screen_shot_2019-10-22_at_1.31.33_pm.png

screen_shot_2019-10-22_at_1.32.10_pm_0.png

screen_shot_2019-10-22_at_1.33.29_pm.png

Select Financial Technology M&A Transactions1

screen_shot_2019-10-22_at_1.35.57_pm.png

U.S. Bancorp’s Acquisition of Talech

  • Talech is a leading provider of operational, business management, and point-of-sale software solutions tailored for restaurants, professional services providers, and retailers
  • Talech serves over 8,000 small- and medium-sized merchants and processes over $2.3 billion in customer payments through its platform annually
  • US Bank’s acquisition of Talech increases it’s footprint with and access to SMBs and will enable the financial services provider to better deliver data-driven solutions and consumer insights to merchants
screen_shot_2019-10-22_at_1.39.39_pm.png

Blackstone’s Quick Turnaround With Sale of Refinitiv to the LSE

  • Refinitiv is a leading provider of financial data and analytics software and risk management solutions for financial institutions and investors
  • Refinitiv serves over 40,000 institutions in approximately 190 countries across the globe, representing over 400,000 end-users and over $1T in bond and FX trade facilitation
  • The acquisition, which comes less than a year after Thomson Reuters sold a majority stake in Refinitiv, will enable LSE to better monetize the wealth of data generated through the exchange leveraging Refinitiv’s analytics and distribution capabilities
screen_shot_2019-10-22_at_1.40.37_pm.png

Mastercard Acquires Nets’s A2A Payment Business

  • Nets, headquartered in Denmark, provides an array of financial services and payment processing solutions to merchants and banks, including over 700,000 merchants, 260,000 enterprises, and 250 banks across Europe
  • The acquisition represents Mastercard’s largest transaction in its history and will broaden its solution offering and capabilities within electronic billing, clearing, and most notably instant payment services and real-time transfers
screen_shot_2019-10-22_at_1.42.00_pm.png

Vista combines AltaReturn with Black Mountain

  • AltaReturn is a leading developer of investment management and reporting software, including fund management, CRM, and portfolio monitoring solutions for the alternative investment industry
  • AltaReturn, founded in 2008, scaled rapidly to deliver cloud-based software to some of the leading venture capital and private equity firms across the globe
  • Vista will combine AltaReturn with existing portfolio company, Black Mountain Systems, to form Allvue and will collectively serve investors representing $2.5 trillion in assets and 90,000 limited partners
screen_shot_2019-10-22_at_1.43.23_pm.png

Roper Acquires Internet Pipeline

  • iPipeline is a leading provider of cloud-based software solutions for the life insurance and financial services industry that simplifies sales, compliance, and operations
  • iPipeline’s solutions connect and facilitate transactions between approximately 150 insurance carriers, 1,350 distributors and financial institutions, and their respective agents and advisors
  • Roper’s acquisition represents a continuation of its successful strategy to acquire vertical-specific software solutions and help fuel their growth as standalone operating companies

Financial Technology Acquisition Activity

Most Active Strategic Acquirers of Fintech Assets by Volume

screen_shot_2019-10-22_at_3.35.54_pm.png

  • The 10 most active strategic fintech consolidators have acquired over 109 companies since 2015.
  • This group completed 19 fintech acquisitions in 2019 YTD, with deal volume continuing to gain momentum through Q3.

Global Financial Software M&A Activity2

screen_shot_2019-10-22_at_3.36.54_pm.png

  • Across financial software, there were 126 M&A transactions closed in Q3 2019, with private equity transactions representing 32% 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

screen_shot_2019-10-22_at_3.38.12_pm.png

Vertical Software and Payments Ecosystem

screen_shot_2019-10-22_at_3.40.07_pm.png

Enterprise & Commercial Solutions – Trading Comparables

Valuation1

As of September 30th, 2019 ($ in millions)

screen_shot_2019-10-22_at_3.41.24_pm.png

Enterprise & Commercial Solutions – Transaction Activity

Select Recent M&A Transactions

screen_shot_2019-10-22_at_3.42.40_pm.png

Select Recent Private Placement Transactions2

screen_shot_2019-10-22_at_3.43.58_pm.png

Institutional Solutions – Landscape

Representative Institutional Solution Providers

screen_shot_2019-10-22_at_3.50.00_pm.png

Institutional Solutions – Trading Comparables

screen_shot_2019-10-22_at_3.50.44_pm.png

Institutional Solutions – Transaction Activity

Select Recent M&A Transactions1

screen_shot_2019-10-22_at_3.51.58_pm.png

Select Recent Private Placement Transactions2 

screen_shot_2019-10-22_at_3.52.52_pm.png

Consumer Solutions – Landscape

Representative Consumer Solution Providers

screen_shot_2019-10-22_at_3.53.40_pm.png

Consumer Solutions – Trading Comparables

screen_shot_2019-10-22_at_3.54.18_pm.png

Consumer Solutions – Transaction Activity

Select Recent M&A Transactions1

screen_shot_2019-10-22_at_3.55.29_pm.png

Select Recent Private Placcement Transactions2 

screen_shot_2019-10-22_at_3.56.42_pm.png

M&A Advisor of Choice for Leading TMT Companies

screen_shot_2019-10-22_at_3.58.22_pm.png

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. awaited). 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.