The fintech industry has experienced explosive growth in recent
years. From 2021 to 2024, global fintech revenues surged at a 27.5%
compound annual growth rate, expanding from $50.1 billion to $103.8
billion. In 2024 alone, the sector has already attracted $113.7
billion in funding across 4,547 deals.1Looking ahead, the future appears bright for fintech. The market
is projected to reach a staggering $1.5 trillion by 2030. In the
near term, fintech revenues are expected to grow at triple the rate
of the traditional banking industry through 2028.2Financial Advisory Services for FINTECH
CompaniesFinancial advisory firms can provide the following services to
fintech companies.Preparation of projected income statements, cash flows and
balance sheets
Scenario and stress testing liquidity and solvency
analyses
Quality of Earnings (“QOE”) studies for companies
courting buyers
Fairness opinions for mergers and acquisitions
Valuations of intellectual property (“IP”) and
employee stock options
Projected Financial StatementsA financial advisory firm can develop due diligence based
projections significantly enhancing credibility for investors by
creating a concise presentation with supporting metrics, graphs,
and visuals, including:C–level executives’ backgrounds and experience
Strong and protected company IP
Product/services’ competitive strengths
Relevant supports for revenue growth and margins
Demographic trends
Economic factors
The company’s projected market share capture
Quality of Earnings (“QOE”) – Historical
Accounting Profits v. Going Forward Cash FlowsIn the M&A space, the QOE report helps the buyer and seller
understand key company operating metrics, such as QOE ratios,
revenues, gross margins, cash flow, adjusted EBITDA, and working
capital. It bridges the knowledge gap making both buyer and seller
comfortable completing the transaction.QOE analyses dive deeper than financial statements and
include:QE Ratio: Net Cash Flow from Operations ÷ Net
Income
Quantify quality income and compare to non-cash accounting
profits arising from policy changes, foreign exchange fluctuations,
allowance and reserve estimate changes, and depreciation
estimatesRatio > 1: higher quality
earnings; ratio < 1: lower quality earningsAdditional Key Ratios: quick ratio; accounts payable days
outstanding; sustainable profit margin; employee turnover
Revenue patterns and growth, such as anomalies, seasonality,
customer concentration, and product concentration
Expense Adjustments: 1) additional recurring costs
post-transaction; and 2) expenses not required post-transaction,
such as duplicate overhead for consolidated operations or
above-market salaries
Future working capital requirements, reserves, and liability
recognition
Identify and analyze potential indebtedness not on the balance
sheet whic
