Fintech Valuation Multiples: 2023 Report
Last Updated: July 20, 2023
Our analysts recently compiled data on private fintech M&A deals from Q1 2022 to Q3 2023 using private equity networks, expert interviews, and proprietary research to determine accurate fintech valuation multiples in today’s environment. The valuation multiples are displayed in the tables below, and are further segmented by industry. (Sources)
Below, we present a table for both revenue multiple and EBITDA multiple; while both are common, revenue multiple is preferred in fintech M&A because of the high-growth, high-burn nature of these businesses.
Private Fintech Revenue Multiples – 2023
|Company Type||Revenue Range|
|Banking – Commercial||4.2x||5.7x||6.8x|
|Banking – Consumer||4.6x||5.8x||7.1x|
Private Fintech EBITDA Multiples – 2023
|Company Type||EBITDA Range|
|Banking – Commercial||12.2x||14.8x||17.5x|
|Banking – Consumer||11.7x||13.2x||15.5x|
The following sections provide further context to the data above, offering a high-level overview of the current M&A environment for fintech companies, as well as suggestions for how to sell a fintech company in 2023.
The 2023 M&A Market for Fintech Companies
Although the M&A market has experienced a decline in total deals in nearly every sector, fintech remains relatively unaffected. Our research recorded nearly 600 private fintech deals, this number nearly doubling pre-pandemic levels—which peaked at approximately ~320 deals. Given the decline in the general M&A market that began in Q2 2022, a greater appetite for M&A (and corresponding level of liquidity) is evident within fintech.
While the total number of deals saw an increase, valuation multiples—both revenue and EBITDA—have declined over the last 12 months. For example, the median revenue multiple range as of Q3 2023 was 3.3x-7.2x, which is ~35% lower than it was in 2021. However, data trends show these multiples experiencing minor to moderate increases over the last 3 months.
Revenue Multiples for Private Fintech Companies, 2020-2023
Given an environment of high deal flow and relatively lower multiples, as well as the slowly rising business interest rates (currently averaging ~9%), we can draw the following conclusions:
- Fintech M&A is a buyer’s market in 2023. Sellers are more likely to find buyers but less likely to get a higher multiple than a few years ago, meaning buyers of all types are getting the most value out of fintech M&A transactions. (More about selling to PE firms vs. strategic buyers here.)
- Sellers are likely to benefit from a growth advisory strategy. Assuming they have the time to grow their business for a couple years, many sellers will want to wait to sell in a more favorable environment.
- PE is more likely to offer a higher multiple because a larger portion of their offer will be paid in equity. (More about the pros and cons of selling to private equity here.)
- Getting a higher multiple will require skill. Sellers without the time to spare will want to consider partnering with an M&A firm to secure the best possible deal at closing.
|Related: See our article on The Top M&A Advisory Firms – 2023|
Selling a Fintech Company in 2023
Even experienced business owners can be overwhelmed with the process of selling their company. It’s an emotionally challenging experience by itself, made all the more difficult by the turbulence of the macroeconomic environment and the idiosyncrasies of dealmaking.
I’ve sold multiple companies to both strategic acquirers and PE, and am happy to speak to any fellow entrepreneurs about the experience. You can contact me at the address listed below or through this website’s contact page.
- Fintech M&A Market: Trends, Deals, & Valuation Multiples (beinsure)
- Fintech Valuations Run Into A Macroeconomic Buzzsaw (Bain & Company)
- Fintech: 2023 Valuation Multiples (Finerva)
- How to Value an Early-Stage FinTech Company (Mercer Capital)
- How to Value A Fintech Company (Toptotal)