The value of fintech-related mergers and acquisitions hit $10 billion in the last three months, with deals involving payments firms dominating, data from investment bank Berkery Noyes shows.
While the number of deals carried out in the fintech sector remained steady during the quarter, the aggregate value nearly doubled, from $5.3 billion. The most recent reporting period was the richest in the last year and a half.
In terms of valuations, the median revenue multiple from 2013 through the first three quarters of 2014 increased from 2.3x to 3.2x, while the median Ebitda multiple rose from 12.0x to 16.2x.
Berkery Noyes looked at M&A activity involving capital markets, banking, insurance and other financial services but payments firms dominate, accounting for seven of the 10 biggest fintech deals so far this year.
In the most recent quarter alone there have been two $1 billion plus deals: FleetCor’s acquisition of Comdata Corporation for $3.5 billion and Ingenico’s $1.1 billion GlobalCollect buy.
The number of deals in the payments segment underwent a 23% quarter-to-quarter increase and Berkery Noyes predicts that Apple Pay could have a serious knock-on effect as firms involved in EMV and NFC technology attract attention.
John Guzzo, MD at Berkery Noyes, says: “Card providers and merchants are seeking to gain a competitive edge and reduce fraud related costs by acquiring the best technology available. As EMV capable systems reduce in-person fraud, fraudsters will shift online, thus requiring merchants to adopt even more advanced technology.
"We also expect strategic acquirers to enhance their product suites by acquiring leading-edge mobile payments, wallet, and commerce companies."