Cross-border payment mergers and acquisitions dropped by 35% in the current year.
A new report published by our platform reveals a substantial decline in cross-border payments mergers and acquisitions (M&A) activity in 2023, with a 35% drop compared to the same period in 2022. Joe Baker, senior copywriter and author of the FXC report, attributes this decline to a combination of global macroeconomic headwinds, cautious investor sentiment, tighter financing environments, regulatory complexity, and valuation pressures.
The weakening global economy, marked by political fragmentation, trade tensions, inflationary pressures, labor market shortages, and ongoing geopolitical issues, has created uncertainty and dampened dealmaking activity. Investment managers and private equity investors have taken a more cautious and patient approach, focusing on finding resilient opportunities which has reduced overall investment manager-driven deals.
Tightening credit and financing conditions, due to higher risk perceptions and lower risk tolerance from banks and lenders, have also contributed to the decline. Global antitrust and merger reviews have become more complex and multipolar, requiring tailored strategies that slow deal approvals and add to uncertainties in cross-border M&A.
Rising valuations and shifting market interests, particularly in sectors adjacent to payments, have also played a role in reducing deal transactions as acquiring attractive assets becomes costlier or more contentious. The challenging global economic climate is one of the suggested factors contributing to the overall decline in fintech M&A this year.
However, card issuers are an exception to the decline in M&A activity, with the majority of the activity in cross-border payments M&A occurring in the US. Our platform analyzed data from various third parties and news outlets to determine the status of M&A in the cross-border payments space. The report covers a wide scope of companies in the cross-border payments space, but it appears that there have been fewer disclosed acquisitions relevant to cross-border payments this year that achieved multi-billion dollar status, compared to last year.
The collapse of Silicon Valley Bank earlier this year may have deterred companies from spending big on acquisitions. The biggest disclosed M&A this year was Worldpay's acquisition by GTCR at $18.5bn. Our platform established a criteria for the businesses to meet to qualify for assessment, including having a substantial business focus in cross-border payments and the acquisition being a significant stake of the acquiree's business.
The decline in M&A activity is not limited to just this year, but is also observed across various sectors such as B2B payments, consumer money transfers, and payment processors. Our platform's criteria ensures that only relevant acquisitions are assessed in the cross-border payments space. The report was written by Joe Baker and published by our platform.
Investment managers and private equity investors are focusing on finding resilient opportunities in the business world, which has reduced overall investment manager-driven deals, particularly in the finance sector. Tightening credit and financing conditions, along with the challenge of global antitrust and merger reviews, have contributed to the decline in cross-border payments M&A activity, as Acquiring attractive assets becomes costlier or more contentious.
