Observations on Key Fintech Trends
- The financial technology market continues to garner significant interest from financial investors and strategic acquirers alike, with 597 M&A transactions completed year-to-date through Q3'18
- Software companies are increasingly seeking opportunities to integrate payments and billing directly into their solutions to both improve end-user experience and capture additional economics from financial management and payment processing
- Global payment processors continue to seek opportunities to grow and differentiate the payment streams they capture and integrated capabilities they provide, evidenced by continued acquisition interest across sectors, and as payments continue to migrate online and into software driven environments
- Corporations globally are seeking software that optimizes supply chain and procurement activities through digital B2B payments solutions, as well as working capital exchanges that streamline corporate finance functions
- The banking and insurance industries continue to undergo significant transformation as financial institutions adopt software solutions that improve operational workflows and enhance client experience across all business lines
- Consumer adoption of digital and mobile payment solutions has accelerated globally as the proliferation of smartphones, digital currency, and mobile wallets make online transaction increasingly frictionless, secure, and convenient
Financial Technology Taxonomy
Case Study: Therapy Brands
HW’s TMT Group advised Therapy Brands on its acquisition by Lightyear Capital and Oak HC/FT.
Therapy Brands is a leading provider of fully-integrated practice management, electronic health record (EHR), payment and revenue cycle management (RCM) solutions for the mental and behavioral health market.
Through its comprehensive SaaS platform purpose built for mental and behavioral health practitioners across diverse specialties, Therapy Brands’ solutions streamline practice management, EHR, RCM, billing, and payments, driving operational efficiencies while improving customer satisfaction and clinical outcomes.
Therapy Brands serves thousands of practices across diverse end-markets, including psychotherapy, applied behavioral analysis, substance abuse, speech and occupational therapy throughout the US and processes billions in patient payments and insurance claims annually.
- Data & Analytics
- Revenue Cycle MGMT. (RCM)
Select Financial Technology M&A Transactions1
Global Payments’ Acquisition of SICOM
- SICOM is a leading provider of cloud-based payment processing and customer engagement software, and point-of-sale technology for quick service and fast casual restaurants.
- SICOM helps restaurant owners, franchisees, and food service management providers optimize customer experience and streamline operations across front- and back-end functions.
- Global Payment’s acquisitions of SICOM furthers its expansion into vertical specific software solutions and provides a complementary customer base to its existing Xenial product suite, strengthening its position in one of its largest addressable markets.
Global Payments’ Acquisition of AdvancedMD
- AdvancedMD is a leading provider of cloud-based practice management and patient engagement software solutions for small-to-medium size ambulatory physician practices.
- AdvancedMD services over 22,500 practitioners across 8,000 practices in the U.S. and processes approximately 3.5 million insurance claims each month.
- Global Payments acquisition of AdvancedMD represents a continuation of its strategy to bolster its vertical-specific software portfolio to capture sticky payment volume across.
GrubHub’s Acquisition of LevelUp
- LevelUp is a leading provider of omni-channel restaurant consumer engagement software, customer loyalty, and mobile payment solutions across the US.
- LevelUp serves over 200 enterprise brands across thousands of locations and facilitates orders and payments for millions of customers annually through a consolidated digital wallet.
- GrubHub’s acquisition of LevelUp extends its reach into restaurant point-of-sale integration solutions and strengthens its ability to effectively attract and engage new and existing customers, respectively, to drive increased sales.
EQT’s Acquisition of Banking Circle
- Banking Circle is a leading provider of mission-critical online infrastructure for fast, compliant cross-border payments for banks, card entities, and payment gateways.
- Headquartered in Denmark, Banking Circle expands the geographic reach of financial institutions and processes €60 billion in annual run-rate payment volume globally.
- EQT’s acquisition is intended to support growth initiatives, including strengthening of Banking Circle’s product portfolio and expansion into new geographies as it continues to disrupt traditional solutions.
Financial Technology Acquisition Activity
Most Active Strategic Acquirers of Fintech Assets by Volume4
- The 10 most active strategic fintech consolidators have acquired over 176 companies since 2012.
- This group completed 18 fintech acquisitions in the first three quarters of 2018, just 8 transactions shy of their full-year total from 2017.
Global Financial Software M&A Activity4
- Across financial software, there were 163 M&A transactions closed in 3Q 2018, with private equity transactions representing 27% of total deal volume.
- Strategic and financial acquirers continue to seek innovative financial technology solutions at a pace consistent with prior quarters, a steady trend that is underpinned by large, established vendors aiming to augment their capabilities, limit disintermediation, and drive internal operational efficiencies.
Enterprise & Commercial Solutions – Landscape
Representative Enterprise & Commercial Solution Providers
Vertical Specific Payments Solutions – Landscape
Representative Vertically-Focused Integrated SaaS and Payments Providers
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.
Note: Logos are representative of vertical participants and not comprehensive.
Enterprise & Commercial Solutions – Trading Comparables
Enterprise & Commercial Solutions – Transaction Activity
Institutional Solutions – Landscape
Representative Institutional Solution Providers
Institutional Solutions – Trading Comparables
Institutional Solutions – Transaction Activity
Consumer Solutions – Landscape
Representative Consumer Solution Providers
Consumer Solutions – Trading Comparables
Consumer Solutions – Transaction Activity
HW Financial Technology Introduction
Technology, Media & Telecom (“TMT”) Group
- 35 professionals across Boston, San Francisco, and London
- 47 closed transactions in the last 24 months
Internet and Digital Media
- Consumer Internet
- Digital Media and Content
- eCommerce and Retail
- Online Marketing
Software / SaaS
- Enterprise Software
- Data and Analytics
- Data Center and Managed Services
- Infrastructure and Security Software
- IT and Tech-Enabled Services
TMT Vertical Focus Areas
- Education Technology
- Healthcare IT
- Human Capital Management
- Internet and Digital Media
- Manufacturing Technology
- Membership Management
- Public Sector Software
- Supply Chain, Transportation and Logistics
- Infrastructure and Security Software
Select Recent HW Financial Technology Transactions
Select HW TMT Transactions
2. PNC Capital Markets
3. S&P LCD Stats
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.
Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, which 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 is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business.