2022_Fintech M&A Insights

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11 The Changing FinTech Landscape: A Snapshot of M&A Themes and Trends As key sources of funding, private equity and venture capital investors provide various levels of debt and equity financing and also engage in full take-out acquisitions of FinTech companies. Buyout firms, in particular, are sitting on significant dry powder that can be deployed to invest or acquire FinTechs with strong recurring revenues and generally positive tailwinds, particularly in payments and financial SaaS companies. An historically low-interest environment had enabled liquidity events and allowed consortium deals and minority investments to continue despite the pandemic. Indeed, the pandemic itself has sharpened the perception of the financial services sector as ripe for disruption, with banks burdened by legacy systems and less adept at providing a "frictionless" digital experience for customers. FinTechs have also been looking to the public markets for capital. Prominent initial public offerings (IPO) in the past year include Affirm, Blend, Coinbase, Marqeta, Remitly, Robinhood, and Toast. INVESTORS Regional banks in the U.S. increasingly look to "buy" whereas smaller or community banks generally see partnerships with FinTech as a way to grow fee income.

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