Fintech companies are trading at a higher valuation. In spite of that, the merger and acquisitions activity in the sector is not slowing down. Paypal recently acquired iZettle. This clearly indicates that not only the merger and acquisition activity is increasing but also the deal size is increasing as well. As a result, companies are acquiring more and more Fintech-based companies.
IZettle has quite a few products which will interest Paypal. Also, it is developing products which are technically for the legacy payment processors. In addition to that, these products are actually disruptive in nature. As a result, players like Paypal will benefit greatly by amalgamating these products in their current offerings as well. These products are not just the online retail products but also off-line retail products as well. As a result, the acquisition will benefit people greatly. IZettle normally deals with merchants which are smaller in size in Europe as well as Latin America. It enables them to accept payments with the help of credit card and debit cards.
Paypal is primarily present in the online transaction market. It is seldom present in the off-line one. That is why, with the help of this acquisition, it will be able to establish itself in the off-line market as well. Moreover, other companies are also acquiring more digital companies. Recently, Square acquired the company Weebly. Weebly is a platform which allows the users to create websites.
In addition to that, the Fintech sector, as well as the digital sector, is witnessing a lot of synergic acquisitions by the established players. These include the Fintech companies as well.
In addition to that, the companies are getting acquired even at higher valuations. The established businesses are not waiting for a greater period of time to get the right valuation. They are even acquiring them at higher valuations. This is because the Fintech companies, as well as the companies in the digital marketing sector, are growing at a brisk pace. That is why, even at higher valuations, they are actually a good deal. The total deal of Paypal acquiring iZettle stands at $ 2.2 billion. This is actually double the valuation for which iZettle was going for the IPO. This clearly indicates that even at inflated valuations, the deals are happening in the Fintech sector quite easily. Companies are taking growth into account and thereafter only looking to acquire the companies and as a result, acquisitions are happening at the higher valuations.