Creating Strategic Value through Financial Technology

CHAPTER 12Liquidity Options Beyond a Sale

INTRODUCTION¹

In Chapter 11, we noted that mature, successful FinTech companies, particularly the largest, most highly valued ones, are difficult to acquire given their size and valuation, which limits the pool of potential buyers.

Recent market trends are favorable for FinTech; however, these trends may not last indefinitely and any slowdown could temper M&A activity and liquidity options for FinTech companies. Should market conditions cool and exit options through a traditional sale be limited, FinTech companies and their stakeholders, which will likely increasingly include banks, may need a strategy adjustment to include liquidity options other than a traditional sale to a third‐party. Consequently, this chapter discusses liquidity alternatives other than a third‐party sale and may be particularly relevant for FinTech entrepreneurs, bankers, and their stakeholders.

Some of the best tennis players have the ability to alter their game depending upon the conditions and add a wrinkle in important moments that their opponent has previously not seen before. Similar to a great baseline tennis player who adapts his or her game and commits to moving forward in the court more on grass (a court surface that rewards that strategy more), FinTech founders and investors may need to consider a strategy adjustment depending upon market and industry conditions present. These strategic options can be extremely important to entrepreneurs and shareholders ...