FINTECH M&A TRENDS: SPRING 2020

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    Introduction – Resiliency

    Arguably, no industry underpins the “how” in how business gets done more than FinTech; it is a far-reaching tech industry comprised of numerous subsegments, each with distinctive business models and idiosyncratic COVID-19 risk. As this unprecedented situation has unfolded, the theme of resiliency has continued to reverberate around the market. The FinTech industry will be no different from many other industries, in that firms that do not provide an operationally critical service will struggle in the near term.

    What is compelling about FinTech during this period is two-fold: first, there is inherent resilience in many of the companies in this sector, and second, FinTech companies help facilitate resilience for the businesses and consumers it serves. For many FinTech companies, contractual, recurring revenue business models provide steady, high-visibility revenue streams, and expenses follow revenues, providing two layers of insulation during downturns. The resilience FinTech firms provide their users differ for businesses and consumers. For businesses, FinTech provides support, helping one to get paid faster, stay on top of expenses, reduce friction when seeking capital, or manage financial infrastructure. FinTech can also give smaller businesses a benefit, such as fraud protection, which helps them be more resilient. For consumers, FinTech provides access to financial products and solutions from any location, so that consumers can connect to bank accounts, alternative payment plans, or investment accounts, and securely shop online, while sheltering in place.

    At Meridian Capital, we cover the Technology industry in which FinTech will see continued adoption and growth in the near term. Investors are continuing to back FinTech companies, recognizing that this unprecedented situation will accelerate the use of and need for many FinTech services moving forward. We expect to see well-capitalized businesses taking advantage of their strength in this downturn to make solid acquisitions at more favorable prices.