What did Davos define about the moment of the M&A sector?

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Text by Pyr Marcondes, journalist, publicist, consultant, publisher, author, investor, M&A Tech Advisor. He is a Senior Partner at Pipeline Capital.

The World Economic Forum, which takes place annually in Davos, Switzerland, took place again this month, after two years half suspended due to the Pandemic, and, as always, showed us a portrait and promoted debates on the major global economic issues. And M&A was not out of the agenda.

In some meetings parallel to the central debates, but with significant weight due to what M&A always represents as a systemic lever of global capitalism, crisis or not, the subject was debated. And if the crisis exists, as the Chinese have always wisely said, there are also opportunities.

The sector that still attracts the most interested parties and the most avid investors is undoubtedly finance. A world of more digital money (with crypto assets on the move, albeit perhaps at a slower pace) creates an environment in which disruptive innovation should still present a good moment for fintechs and for the investors who bet on them. JPMorgan’s investor day – during the event – exemplified this. A hot topic was the increased appetite for fintech mergers and acquisitions.

The combination of a sharp drop in fintech prices (more than 50% on average from peak using the global fintech ETF), some fintechs struggling to generate cash optimizing higher cash/equity positions vis-à-vis banks will mean a strong recovery in M&A, designed the Forum.

While crypto may be in decline, there has been a sea change in the perceived threat level of disruptive new financial entrants seriously and fundamentally threatening the profits of classic established banks.

But the agenda of competition and activation of sectors such as technology giants, retail and payment companies also stood out, all of which are now increasingly involved in generating disruptions in their value chain, investing in differentiation and invading silos that were previously distant from them. Including the financial sector itself, because many of them are actually becoming banks.

But they are also becoming publishers and players in business chains such as games and entertainment.

The strategic answer to this is simple: more focus on scaling platforms, more spending on technology and … more acquisitions. appear, but there was no mention of any crisis in the M&A market at the Forum. On the contrary, again, crisis is synonymous with opportunity.

Text by Pyr Marcondes, journalist, publicist, consultant, publisher, author, investor, M&A Tech Advisor. He is a Senior Partner at Pipeline Capital.

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