During a record year for M&A activity, Payments megadeals balloon Fintech valuations

2019 was another record year for Mergers & Acquisitions. Global M&A activity reached $3.9 trillion in deal value, the 6th year in a row that it surpassed $3.0 trillion and the 4th highest amount historically. Payments transactions were no exception, yielding among the highest deal values in the Software and Services space through the last twelve months. As new challengers muscle their way in and massive consolidation in the fintech space continues, the value of payments processing M&A will no doubt follow suit.

The biggest of the megadeals in the payments space this year occurred in July when Fidelity National Information Services (FIS) closed its acquisition of global payments leader WorldPay. FIS offered $35.2 billion for the payments processor implying a LTM revenue 10.9x multiple. The combination of these Fintech giants creates one of the world’s largest e-commerce and payments companies.

In January, Fiserv, the word’s largest financial technology and services company, struck a deal to acquire First Data, a provider of payment solutions for merchants, financial institutions and card issuers, in an all-stock deal valued at $22 billion, implying an enterprise value of $38.4 billion. The transaction represents a 4.0x LTM revenue multiple. The merger of these two companies combines the credit- and debit-card transactions processing services Fiserv provides for banks and the merchant-side solutions of First data.

In September, Global Payments completed its merger with Total System Services (TSYS) to create a one-stop-shop for payments processing services with significant scale and expansive international presence. At $21.2 billion, the all-stock transaction represented a 6.1x LTM revenue multiple and an implied enterprise value of $24.8 billion for TSYS, making it the third largest of the payments megadeals last year.

Other notable payments acquisitions include PayPal’s acquisition of Honey Science Corporation ($4.0 billion), Mastercard’s acquisition of Nets Groups operations ($3.2 billion) and of electronic bill-pay SaaS provider Transactis, the acquisition of World First by Ant Financial operator of China’s Alipay mobile wallet, and ACI Worldwide’s acquisition of e-billing company, SpeedPay ($750 million).

By wpteam