Kriti PatelIn 2023, global M&A activity in all sectors, including fintech, fell to its lowest level in ten years due to high interest rates and a global economic slowdown. Despite this challenging environment, a significant number of fintech deals are still getting done, primarily in the form of strategic investments and acquisitions involving companies struggling with cash flow. However, many players in the fintech space are sitting on the sidelines, waiting for market conditions to improve.
The article offers three strategies for navigating the current fintech M&A environment:
- Obtain a quality of earnings report to demonstrate accurate financial metrics and provide a current and detailed picture of a company’s financial health.
- Be prepared for early due diligence, as buyers are starting diligence much earlier in the deal lifecycle.
- Expect more in-depth and prolonged due diligence, as buyers are more skeptical of financial results and are conducting more scrutiny.
The article suggests that despite the current challenges, M&A activity in the fintech sector is expected to pick up in 2024 as interest rates stabilize. The authors highlight that their company, BPM, can help fintech companies navigate the M&A process and provide guidance on best practices and due diligence.
