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A Fintech Acquisition Frenzy?

Recent Fintech Acquisitions


  • 4sight Financial Software
  • Bonaire
  • Paladyne
  • QED


  • Code Red
  • Portware
  • Vermilion


  • SunGard

IHS Markit

  • Cadis
  • Ipreo
  • thinkFolio


  • Equipos


  • Advent Software
  • DST Systems
  • Eze Software
  • Primatics Financial
  • Salentica
  • Varden Technologies

State Street

  • BestX
  • Charles River Development


  • Investor Analytics
  • UBS Delta

State Street’s July 2018 announcement of their intention to acquire Charles River Development (CRD) was one of the worst-kept secrets in the industry. Rumors of the deal had been swirling for months. The shocking news was the price tag of USD 2.6 billion—eighteen times CRD’s 2018 estimated net income. CRD isn’t a flashy, new tech vendor; it’s a 35-year-old behemoth. Granted, CRD has a large and stable client base, but how (and when) will State Street realize a return on such an enormous investment?

Just ten days after the State Street announcement, SS&C Technologies announced their intention to acquire Eze Software from TPG Capital for USD 1.45 billion—another rich deal for a mature investment platform. This announcement came on the heels of SS&C’s January announcement to acquire DST Systems for USD 5.4 billion. SS&C also tried to buy Fidessa earlier in the year, but Bill Stone, CEO of SS&C, said the price was “nose-bleed level, and that’s not generally what SS&C does.” SS&C has a history of growth through acquisition, but the Eze deal moves them further into the front office than they could get with their 2015 Advent acquisition.

A history of fintech acquisitions

While the State Street and SS&C deals are getting attention because of their price tags and their coincidence, this kind of activity has been ongoing for the last several years. It’s a continuation of industry consolidation, and of firms expanding their technology and services to cover more functions across the investment management life cycle. Investment management firms want to provide one-stop shopping for their clients. If they can’t offer more functions and services through acquisitions, they are looking to provide them through coopetition—forming strategic alliances with competing vendors. One example is the Eagle Investment Systems Strategic Alliance program, where they look to partner with third parties offering products and services that complement their core accounting, data, and performance offerings. 

What’s in it for the acquirer?

These deals don’t come cheap, so what benefits do the acquirers expect to realize? The most obvious answer is increased revenue and market share. But there’s a longer-term strategy at play. The acquiring firm immediately expands their client base for existing products and services. By filling the functional gaps in the investment life cycle, they can compete up, down, and across functionality. It’s harder for an investment manager to find a new vendor when they are relying on their existing vendor for multiple functions. So by providing more functions, vendors make their solutions much stickier. 

What’s in it for the acquired company?

How does the acquired company benefit? Owners and senior managers of the acquired company can cash out, although key personnel are sometimes incentivized to stay for a period to smooth the transition and mitigate client concerns. Like the acquirer, the target company benefits from a new potential client base for cross-selling opportunities, and for expansion into new markets and geographies. They may also gain a cash infusion for new development.

What should clients consider?

Acquisitions present both pros and cons for investment manager clients. Oligopoly can lead to vendor risk, reduced competition, and higher prices. On the other hand, clients benefit from having to manage fewer vendors, integration points, and data reconciliations.

Depending on how the deal is structured, key people may leave, which could cause clients concern. Will the merger distract staff in the short term? How well do the corporate cultures align? How straightforward or complicated is the integration for the organizations and for the functionality and services they provide? If you don’t want the ‘all-singing, all-dancing’ solution, will the vendor put you at the bottom of their priority list? Can you integrate your choice of tools? How will the development roadmap be impacted? Certainly, we have heard concerns from clients who worry that the vendor’s focus could shift away from core offerings. 

Clients will need to wait some time for answers to these questions. But while they’re waiting, now is a good time to assess their current systems landscape, areas that may be impacted by the acquisitions, and whether an “all-in-one offering” or “best-of-breed” solution is the better fit.

How can we help?

It’s always good policy for an investment manager to regularly assess your current infrastructure as it relates to your target operating model and industry changes. Cutter’s consultants bring abundant, real-world expertise to your projects, gained from many strategic engagements with your peers. This experience, enhanced by deep insights from our research and operational benchmarking analysts, provides clients with uniquely comprehensive insights into industry and system developments, and into current best practices.

Given these recent industry developments, we were not surprised that CutterResearch members recently voted for us to cover the pros and cons of using an all-in-one solution vs. standalone best-in-class solutions in our latest research. We will examine the benefits and challenges associated with each of these two strategies, and the ways our members choose between them. We’ll also explore vendor perspectives, and how the market might be changing as vendors integrate legacy product lines, acquire new products, and offer more cloud-based solutions. Visit our website for full details of upcoming member events in Amsterdam, Boston, and Los Angeles, where our analysts will present their findings.

About the Author

John ClarkJohn Clark has more than 30 years of experience in the investment management industry. At Cutter Associates, John serves as President of the Consulting division. John actively participates in consulting projects, as a trusted client advisor for high-level planning and strategy, including setting priorities and managing capital investments. John also provides expert oversight and guidance on more complex strategy engagements. John’s experience covers all aspects of investment management. John is well known in the industry and is sought out to speak at industry conferences and events. He has also been quoted in many industry periodicals. Prior to joining Cutter Associates, John held senior roles as President and COO for several software companies, including DST Belvedere, Longview Group, SunGard. John holds a B.A. from Tufts University.