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

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Case Study: Therapy Brands

HW’s TMT Group advised Therapy Brands on its acquisition by Lightyear Capital and Oak HC/FT.

screen_shot_2018-10-19_at_3.09.37_pm.pngCompany Overview

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.

Relevant Sub-Sectors

  • SaaS
  • Data & Analytics
  • Payments
  • HCIT
  • Revenue Cycle MGMT. (RCM)
  • Mobile

Enterprise & Commercial Market Observations1

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Institutional & Consumer Market Observations1 

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Select Financial Technology M&A Transactions1

screen_shot_2018-10-22_at_3.43.59_pm.pngGlobal 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.

screen_shot_2018-10-22_at_3.46.30_pm.pngGlobal 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.

screen_shot_2018-10-22_at_3.48.24_pm.pngGrubHub’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.screen_shot_2018-10-22_at_3.49.41_pm.png

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

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  • 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

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  • 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

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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.

Note: Logos are representative of vertical participants and not comprehensive.

Enterprise & Commercial Solutions – Trading Comparables

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Enterprise & Commercial Solutions – Transaction Activity

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Institutional Solutions – Landscape

Representative Institutional Solution Providers

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Institutional Solutions – Trading Comparables

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Institutional Solutions – Transaction Activity

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Consumer Solutions – Landscape

Representative Consumer Solution Providers

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Consumer Solutions – Trading Comparables

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Consumer Solutions – Transaction Activity

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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
  • Mobile
  • 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
  • Fintech
  • 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

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Select HW TMT Transactions

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1. Factset

2. PNC Capital Markets

3. S&P LCD Stats

4. Pitchbook

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