How likely is a deal? There’s no certainty ACI will reach a deal, a source told Bloomberg.
- M&A activity slowed in the second half of last year as high inflation and market volatility stunted the number and total value of deals. Fintech M&A deals dropped to an eight-quarter low in Q3 2022, per CB Insights.
- A takeover would also require deep pockets for any buyer: ACI’s online banking unit sold for $100 million in September. And the company’s market capitalization was as high as $2.93 billion earlier this week. The challenging economic landscape means it will be difficult for firms to finance takeovers by borrowing.
More consolidation to come? A deal for ACI could kick off a period of consolidation within the payments industry, during which larger firms snap up struggling, smaller firms that can’t survive the tough financial climate.
As challenging economic conditions look set to stay, financially strong payment firms could bolster their product lines and reach through M&A deals. Conversely, struggling fintechs may try to sell before their fortunes worsen, providing potential purchasers with cut-price acquisition opportunities.
This article originally appeared in Insider Intelligence's Payments Innovation Briefing—a daily recap of top stories reshaping the payments industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.