Fintech M&A: Deal Structuring, Due Diligence, Compliance and Management Concerns

M&A and investment transactions in fintech often play out at the intersection of Silicon Valley and Wall Street, which leads to unique challenges. Investors in fintech companies (e.g., banking organizations and private equity firms) typically have very different risk appetites and compliance expectations than do young, entrepreneurial fintech firms. The disparate cultures can have important impacts on legal, regulatory and compliance aspects of fintech transactions.

Certain questions have particular importance when a fintech target is involved. Is the target’s business subject to licensing? Are those licenses transferable? What are the required regulatory approvals for the transaction? Has the target operated its business consistent with the buyer’s/investor’s compliance and risk management standards? What are the parties’ rights with respect to the underlying technology and intellectual property? Who controls the timing and terms of an exit transaction? Counsel must address these issues in the due diligence and transaction documentation process.

When more traditional institutions acquire/invest in fintech firms, a particularly important issue centers on the target’s historical compliance efforts, its desire for flexibility and the buyer’s/investor’s desire for internal controls. Traditional financial institutions, who must answer to regulators, may have a different tolerance for regulatory risk than the target they seek to acquire/invest in. Transactions in the fintech space may also involve important negotiations relating to employment and efforts of key persons or innovators at the target.

Listen as our authoritative panel examines issues particular to fintech M&A transactions. In addition to key deal terms, the panel will discuss how to resolve issues relating to retention of licenses, IP and talent, differences in culture, management control, and more.

1. Trends in fintech M&As
2. Tech vs. financial institutions: cultural differences and impact on deals
3. Due diligence of a fintech target
4. Positioning a fintech target for acquisition—gap analysis of compliance protocols
5. Key deal terms
6. Addressing transition of management: retaining talent and key persons

The panel will review these and other key issues:

• What is fintech?
• How do fintech companies and fintech investors/acquirors, such as banking institutions, differ in corporate culture, and how might it impact a transaction?
• What are the key due diligence concerns for a bank or private equity firm looking to acquire or invest in a fintech company?
• Why might retention of certain technology personnel be particularly important in a fintech acquisition or investment?
• What are some key provisions that should be included in a fintech acquisition or investment agreement?