Tough Vendor Competition Portends Lots of M&A

Bank Technology News, November, 2006 by Nikolai D. Fisken

As bank information technology spending continues its heady course, financial services technology (FST) vendors capitalize on opportunities in the market. In the first half of 2005, almost all of the major FST vendors, including Fair Isaac, Fiserv, Jack Henry, Metavante Corp. and Fidelity National Financial Inc., as well as companies like Experian and Oracle, have been snapping up boutique tech shops.Aggressive acquirers have already driven bank IT valuations to levels not seen in years.

It is not uncommon to see deals in the 8x to 10x EBITDA range, compared to a range of 6x to 8x only a few years ago. The EBITDA levels aren't likely to decline. In the next two to three years, expect: * A finite number of deals within core processing. Look for a few of the large-scale core...

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