A Checklist for Effective Investment and M&A in Fintech

10/10/2024
A Checklist for Effective Investment and M&A in Fintech

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Need a playbook for M&A or investment success in the fintech space? This resource is a useful starting point.

A considerable level of merger and acquisition (M&A) and investment opportunity could be on the horizon for fintech companies – especially when compared with other industries over the same period.

In a recent webinar, we surveyed attendees from the fintech sector about their outlook for M&A and investment activity during the next two years. According to the poll, 39% were “bullish” or “very bullish” about increased activity. Half of respondents thought activity would flatten out, and only 11% held bearish views.*

To successfully execute deals, investors and acquirers of fintech companies need to effectively navigate the M&A or investment life cycle, which covers a period that starts long before – and ends long after – the closing. The life cycle also covers everything from financial considerations to regulatory expectations.

To help give investors and acquirers of fintech companies a foundational understanding of how to manage the M&A or investment life cycle and to help fintech companies know what to expect, our specialists developed this checklist for each major phase.

Manage the deal life cycle
See how we help fintech companies like yours uncover risks and opportunities in transactions. 
M&A Strategy icon

Phase 1: M&A strategy

Develop and define your approach to deals and investment:

Buy side

  • Establish M&A or investment strategy
  • Set M&A playbook
  • Screen and select target
  • Conduct predeal valuation and financial modeling
  • Assess risks

Sell side

  • Prepare for due diligence requests
  • Prepare accounting, financial reporting, regulatory, and tax functions for growth enablement and scrutiny
  • Assess company operations
  • Conduct competitive positioning and industry analyses
  • Establish financial projections
  • Develop marketing materials
  • Conduct sell-side due diligence
Due diligence and integration planning icon

Phase 2: Due diligence and integration planning

Cover your financial, regulatory, and operational bases:

  • Conduct management presentations
  • Execute letter of intent
  • Conduct financial due diligence (quality of earnings)
  • Conduct regulatory and compliance due diligence, including functional maturity and resiliency to maintain compliance and assessing the extent to which compliance processes can add business value
  • Conduct technology due diligence, including cybersecurity and application functionality
  • Conduct tax due diligence and assess transaction structuring
  • Establish operations, synergy, and value capture analysis and road map
  • Set integration playbook with comprehensive plan to capture value and navigate people, function, and culture transitions
  • Establish integration management office to set the course, maintain operating continuity, minimize disruption, and achieve deal objectives
  • Set business intelligence and technology strategy and road map
  • Establish accounting, financial reporting, and financial planning road map
  • Establish regulatory and compliance road map
  • Finalize financial model
Closing execution icon

Phase 3: Closing execution

Master the details at the heart of the deal:

  • Assess preclose accounting readiness
  • Perform closing statement calculations and working capital adjustment settlement
  • Remediate any preclose risk, regulatory, and compliance issues
  • Negotiate definitive agreement considering strategy, financial modeling, and due diligence observations
  • Prepare accounting memos, opening balance sheets, and financial disclosures
  • Establish purchase price allocation and valuations
  • Evaluate earnout considerations
  • Prepare for day one readiness and continuity through communication and support of customers, vendors, employees, transaction processing, and operational controls
  • Resolve any postacquisition disputes
Integration execution 
and value creation icon

Phase 4: Integration execution and value creation

Get started on the right foot with postdeal measures:

  • Execute detailed integration plan with dedicated focus on first 100 days postacquisition integration
  • Leverage integration management office to execute integration plan
  • Execute and track synergy and value capture road map to realize key synergies to maximize and accelerate value
  • Enhance accounting, financial reporting, and financial projection structure
  • Enhance risk and compliance management practices for sustained, long-term value
  • Optimize strategic sourcing of third-party vendors
  • Guide change management, including people and cultural transitions
  • Execute IT strategy, including system selection and technology migration
  • Establish and integrate business data analytics
  • Address regulatory pressure or sanctions, tax issues, inappropriate accounting treatments, restatements, or other compliance challenges
  • Establish and execute tax optimization strategy
  • Prepare for audit
  • Select the right audit relationship for the company
Investment
realization icon

Phase 5: Investment realization

Lay the foundation for long-term success and growth:

  • Maximize profitability and performance through transformative initiatives to achieve operational excellence
  • Adapt to evolving regulations, regulatory guidance, and public trust expectations
  • Evaluate bolt-on acquisitions in alignment with strategy
  • Enhance business intelligence data analytics to measure business performance
  • Navigate bank and financial services organization partnerships
  • Execute strategy to realize platform benefits
  • Understand the implications of the agreement language on working capital and earnout calculations
  • Prepare for exit, such as performing sell-side due diligence, confirming IPO readiness, or developing materials to attract investment capital

* 673 respondents. Unscientific poll.

Work with an experienced fintech team that offers deep M&A expertise

The investment and M&A life cycle is complex, deeply interconnected, and multidimensional. It’s a lot to manage – but you don’t have to do it alone.


Our team has worked with hundreds of fintech clients on a range of moments that matter, including M&A and investment activity. Get in touch with our team to discuss how we can help you address M&A risks, regulatory challenges, financial opportunities, and more.

Clayton J. Mitchell
Clayton J. Mitchell
Principal, AI Governance
Kevin Brand
Kevin Brand
Partner, Consulting