Some companies execute smart, strategic acquisitions better than others. Here’s a short list of publicly-traded FinTech & Info Services companies that do M&A well: CoStar Group (tkr: CSGP), Intercontinental Exchange (tkr: ICE), IHS Markit (tkr: INFO) SS&C Technologies (tkr: SSNC) and Verisk (tkr: VRSK). Click Here for Revenue, EBITDA and related metrics.
We love FinTech & Tech-Enabled Services companies that use acquisitions as a strategic lever. Many of the companies that compete in these sectors generate healthy EBITDA and Operating Cash Flow, often with EBITDA margins north of 35-40%. Institutional investors don’t pay company management teams to hoard cash. Therefore, we favor companies that invest in growth (organic and inorganic) and/or return capital to shareholders (we prefer dividends to share repurchases, see our previous writings on the subject HERE and HERE).