Valuing FinTech Companies
Hello All,
I was wondering how Fintech companies are normally valued by ibanks. Are they valued more like technology companies or like financial services firms? I understand that there is a broad array of fintech company types (alternative lenders vs mobile payments etc.) but what wondering if there was a primary method for valuation for this industry.
Are DCFs still a viable method for valuation or would precedent transactions be more appropriate due to the unique nature of fintech firms.
I appreciate any insight you guys can give me. Also if there are books/places online where I can learn more about fintech valuation please let me know!
Thanks in advance.
fintechs are treated as regular "widget" companies (EBITDA based)
fintechs are not financial institutions, so they have regular valuation metrics as other companies
given that there are very few publicly listed peers for fintech companies how does that affect valuations?
Plenty of publicly listed comps depending on the focus. Is it banking vs, trading, etc.
Fintech is a huge space, what in particular are you referring to? Brokers? Exchanges? Software? Data/Analytics? Payments? As everyone above mentioned, standard methods such as DCF, comps and precedents are typically applicable for most firms in this space. Depending on the return profile, if these are earlier stage fintech companies with negative earnings/operating profit, you may end up using revenue multiples but typically ebitda or earnings will suffice.
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