Fintech Valuation Multiples: 2023 Report
Our analysts recently compiled publicly-available data on Fintech M&A deals from Q1 2022 to Q1 2023 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.
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.
Fintech Valuation Multiples 2023 – Revenue
|Company Type||Revenue Range|
|Banking – Commercial||4.2x||5.7x||6.8x|
|Banking – Consumer||4.6x||5.8x||7.1x|
Fintech Valuation Multiples 2023 – EBITDA
|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 by 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 has been perhaps one of the only unaffected sectors. Our research recorded nearly 600 total Fintech deals, nearly doubling pre-pandemic levels, which peaked at approximately ~320. Given the decline in the general M&A market that began in Q2 2022, there is clearly a greater appetite for M&A, and corresponding level of liquidity, 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 Q1 2023 was 1.6x – 5.5x, which is 41% lower than it was in 2021.
Given an environment of high deal flow and lower multiples, as well as today’s relatively high business interest rates (currently averaging ~10%), we can draw a few 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 they could have gotten a few years ago, meaning that 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.
- Getting a higher multiple will require skill. Sellers without the time to spare will want to consider starting a working relationship with an excellent M&A firm in order to secure the best possible deal at closing. (See: The Top M&A Advisory Firms – 2023)
- PE is more likely to offer a higher multiple because they typically buy companies with the intent to grow them over 3-5 years. (More about the pros and cons of selling to private equity here.)
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)
Evan Bailyn is a bestselling author and award-winning speaker on the subjects of SEO and thought leadership. Contact Evan here.