2020 is the year of consolidation for Open Banking API businesses
When Visa first announced the acquisition of a little known fintech company called Plaid for an eye popping $5.3bn in January 2020, the deal attracted significant investor and strategic interest. Since then we have seen multiple acquisitions in the API space, including Galileo which was acquired for $1.2bn by SoFi in April. Mastercard, reeling from missing out on the acquisition of Plaid to Visa, went on to acquire another API provider Finicity for $860m ($985m including earn-outs) in June. Swedish API provider Tink raised €90m in December last year at a post-money valuation of €415m and boasted several well-known investors including PayPal. Since then, Tink has gone on to acquire three companies including financial API provider OpenWrks (Sep 2020) in the UK, which accounts for one third of the country's account aggregation volume.
Fintech firms continue to add new product lines catering to gig economy workers and to expand their offering, both organically and through M&A. Banks and lenders are leveraging Lending as a Service to surface their products and services on platforms outside of traditional banking channels. Companies that started with B2B2C models for gig platforms are now targeting the entire gig economy. The launch of Payments as a Service has increased speed to market and resulted in greater competition. This client briefing note describes how the gig economy is driving the next wave of fintech.
In this April 2020 update, Venero provides an economic review of the potential macroeconomic shock, the impact it may have on HR Tech / Future of Work businesses, and the implications for fundraising and M&A.
We are delighted to present our 2019 analysis of M&A and investment trends in the HR Tech sector. This is the second year in a row we release such a report, after the overwhelmingly positive reception of the inaugural publication.
Similar to last year, in this report we share some of the insights and observations we have gathered from working with companies and investors in the Human Capital Management space over the last 12 months. We review the most prevalent M&A and investment themes, analyse notable transactions and highlight the factors that are likely to drive corporate finance activity for HR Tech businesses going forward.
Below are the key takeaways. You can request the full report here.
Client Briefing Note:
Cybersecurity is a sector flush with fragmented technologies. M&A deal flow is underpinned by robust structural growth, transition to the Cloud, government regulations and sophisticated cyber breaches. In this context, small players with niche technologies are acquired by larger peers who need to expand their capabilities and scale their product offerings.
This briefing note looks at the main drivers of M&A activity in the cybersecurity space, reviews transaction volumes, the most active acquirers and trends such as vendor rationalization. It also explains the importance of an Advanced Security Operation Control as a driver for acquisitions and analyzes precedent transaction multiples and public trading valuations.
Client Briefing Note:
IBM’s announced acquisition of Red Hat in a deal with an enterprise value of roughly $34 billion at a hefty premium triggered a recovery in cloud stocks. The reason this particular transaction acted as such powerful a trigger is because it reinforced a pattern that the market has come to expect: transformational deals, outsized tech valuations and continued anxiety among the majors to remain competitive and perhaps even relevant.
This briefing note looks at the recent trends in 'cloud' M&A, the impact on acquisition valuation multiples and the expectations for further consolidation among cloud software companies in 2019.
Client Briefing Note:
Salesforce reported reported Q1 FY19 revenue growth of 25% YoY, consistent with its remarkable historical performance. The company reported double-digit growth in all relevant metrics, exceeded analyst expectations and company guidance, and raised expectations for future performance across the board. Growth is showing no signs of decelerating, despite the company surpassing $12bn in ARR.
This briefing note analyses the core pillars of Salesforce's performance, the company's latest acquisitions and the implications for Salesforce's growth strategy, competitive positioning and outlook.
Like so many other industries, the Human Capital sector is faced with continued change and disruption. From updated recruitment methods for attracting and supporting an increasingly transient workforce to employee engagement and the push towards a digital workforce experience, technology is transforming the future of work.
In the report (available here), we explore the latest HR Tech sector tends, review recent M&A and investment activity, compare valuation multiples (trading and acquisition) and analyse the strategy of key players in the space.