Fintech M&A Market Appears to be Recovering After Struggling in H1 2020 due to COVID

 

The Fintech mergers and acquisitions (M&As) market appears to be rebounding from the COVID-19 pandemic.

As reported by Financial Planning, the Wealthtech sector seems to be recovering after the Coronavirus crisis had put many deals on pause.

RightSize Solutions, a company offering cybersecurity and IT solutions to RIA firms, was recently acquired by Swizznet, a cloud-enabled software business. The terms of the deal have not been shared publicly.

Swizznet, which is owned by private equity company Bluff Point Associates, is planning to branch out into the wealth management sector. Swizznet has mostly been working with accounting companies.

The deal appears to reflect an overall rebound in Fintech M&As. There were only 166 M&A deals that were made during Q2 2020 which is the lowest since 2014. But there was a strong recovery during Q3 2020 which saw 245 Fintech M&A deals according to data provided by FT Partners, an investment banking company. The total value of these deals is estimated at $66.8 billion, which is notably the third-highest ever, FT Partners revealed.

FT Partners confirmed that there have been 665 Fintech M&A deals year-to-date in 2020. There were 748 such deals during the first three quarters of last year. Greg Smith, MD at FT Partners, noted that this level of activity suggests that the financial tech M&A sector is recovering despite the challenges due to COVID.

FT Partners further noted that 129 of the 2020 YTD Fintech M&A transactions involve the wealth and capital markets sector.

The largest acquisition this year was Morgan Stanley’s $13 billion buyout of E-Trade, which accounts for around two-thirds of nearly $20 billion allocated towards wealthtech M&As this year.

As covered in September 2020, Fintech funding during H1 2020 was led by corporate deals, but there was a significant decline in M&A investments.

As reported, global Fintech funding declined during the first half of this year, with $25.6 billion of total investment secured globally through 1,221 deals. But corporate business deals had been driving most of the VC activity. This, according to the Pulse of Fintech H1’20, which is a report on global Fintech investment activity that’s published by KPMG International, bi-annually.

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