Declining valuations across the fintech segment are spurring interest from potential buyers.
The pace of M&A slowed in the first half of 2022 in the U.S. fintech and payment sector, with 221 total deals compared to 258 in the first half of 2021, according to a new data analysis by S&P Global Market Intelligence.
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Fintech M&A Deals
Key findings from the newly released analysis include:
- Among the 20 largest fintech deals announced since the start of 2021, five deals, worth a total of $19.09 billion, were announced in 2022. The other 15 deals, worth a total of $65.91 billion, were announced in 2021.
- Late-stage fintechs facing more valuation pressure: The downward pressure on valuations appears to have a heavier impact on fintechs at later stages. The stock market volatility weakened companies' interest in IPO and SPAC mergers, which are two of the major liquidity venues for venture capital-backed fintechs. Many of them are not profitable and rely on external capital to sustain growth.
Macroeconomic uncertainties alter investors' appetite: When interest rates were lower, investments were poured into equities for higher yields. Fintech companies' high growth attracted investors and pumped up valuations, even if they were losing money.
