US-led M&A and investment is set to drive digital transformation in 2020
Digital Transformation in the finance sector will be the sweet spot for M&A and investment for the remainder of 2020, according to technology-focused investment bank, ICON Corporate Finance.
ICON believes that Digital Transformation across all industry sectors has accelerated to become the most pressing priority for organisations in the aftermath of Covid-19. ICON predicts, this will drive future growth and appetite for acquisition of tech companies worldwide, particularly those involved in finance.
Its assessment is underpinned by a recent ICON survey of some of the most active UK M&A buyers. This showed that there has been no drop in appetite for acquisition in the tech sector in 2020, which remains high, with key areas for expansion expected to be in fintech, cloud, managed services, healthtech, cybersecurity, AI and enterprise software. This is further backed up by research from Pitchbook*, which showed that in Q1 fintech VC exit value surpassed 2019’s $4.9bn.
As organisations adapt to new ways of working, companies in the US tech market tech and will continue to be amongst the most acquisitive as they continue to seek out deep tech and disruptive young companies that are reshaping the world.
To capitalise on future growth in the sector and US market appetite, ICON has extended its footprint into the region with the opening of an office in San Francisco. Providing unrivalled access to the world’s tech and deal hub, it will bring clients in Europe, Africa and Asia direct access to the epicentre of the world’s tech community, where appetite for investment and acquisition in disruptive technology is unrelenting. For US clients it will present new possibilities in both domestic and international markets.
With the West Coast central to its future expansion plans, ICON, which led US-based IQVIA’s acquisition of UK-based Optimum Contact, and JP Morgan’s funding of UK-based Mosaic Smart Data, has appointed former industry analyst at 451 research and datatech expert, Ben Kolada as head of US Tech investment banking. Ben has over a decade of experience in the sector and a deep knowledge of the West Coast and US markets.
According to Pitchbook Data’s Emerging fintech research* increasing cybersecurity threats are forcing organisations to turn to technology to mitigate against business interruption, protecting both systems and remote workers. This is particulary acute for financial institutions, where new areas of risk and regulation have been introduced to address expanding cyberthreats and data security concerns. It sees regulatory buy-in as a driver of RegTech solutions.
Pitchbook’s report also shows that banks seeking to address changing consumer expectations will continue to innovate, with smaller banks seeking partnerships and larger banks more likely to make acquisitions or invest in capabilities in house. BaaS platforms are seen as a particularly strong growth area for fintech companies providing ways for banks to increase their competitiveness in the digital economy.
CEO and founder of ICON, Alan Bristow, adds: “As the world discovers the new normal, it is the tech sector that will drive societal changes and enable new ways of working. The US West Coast’s innovative approach and its dominance in deals origination, is the core driver for our new presence in San Francisco. We are excited to be bringing US markets to Europe’s doorstep, and vice versa.”
• Pitchbook Data Inc Emerging FinTech Research Q1 2020