FinTech market disruption has led to a bifurcation of FinTech providers – Lions and Lambs. See our “Lions & Lambs” company list with commentary at the end of this note.
The FinTech space – whether it be the Capital Markets flavor or the Payments variety – is undergoing rapid change. Within Capital Markets – alternative data providers are challenging the established order – Bloomberg, Thomson and FactSet. A period of consolidation has swept through the Payments space (WP/Vantiv, FISV/FDC, FIS/Sungard, PYPL/XOOM/Venmo) which we expect to continue as large players (AAPL, AMZN, GOOG, Samsung) upstarts (Stripe, Square and numerous others) and the unshackled (PYPL), disrupt the landscape of legacy Payments companies and Financial Institutions.
We believe that FinTech CEOs and Corporate Boards ought to live by the mantra “Acquire or Be Acquired”. Some companies have “operationalized” the M&A process having leveraged strategic M&A to their advantage. Other companies simply don’t have it in their DNA to effectively use M&A as a strategic lever. Yet others are working to figure it out.
Lions and Lambs: We divided the FinTech company universe into two categories: Lions – primarily represented by those companies that have demonstrated an ability to effectively use M&A to their advantage and/or that have massive scale. Lambs – companies that have an aversion to M&A and/or that will likely be acquired either by a strategic or financial acquirer, or left for dead (no growth, steady customer and employee attrition over a period of years) due to a lack of innovation and lack of scale. Not all lions are equal, not all lambs are equal.
Click Here to access our FinTech Lions and Lambs list with commentary.