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M&A activity came surging back in the latter half of 2020. Now, Wall Street is primed for robust dealmaking in 2021.
A new regime in Washington could alleviate the apprehensions of some overseas buyers and spark renewed cross-border dealmaking activity, said Vito Sperduto, co-head of global M&A at RBC Capital Markets.
Cross-border transactions are likely to see a “significant uptick” once the administration of President-elect Joe Biden steps in, Sperduto said. While some international deals have happened in the past four years, “there already was a slowdown in cross-border transactions pre-pandemic,” he said, “and it’s just gotten worse.”
Hedge funds, on average, had a good year — the most recent Preqin data shows hedge funds are up more than 13% for the year after a strong November.
But performance wasn’t equal across all strategy types, with concentrated equity managers — especially those with big private-market bets— leading the way while well-known quants struggled. And a lot of those trends are expected to carry over through the new year.
Insider asked four fintech investors what they’re looking out for in 2021. All mentioned embedded finance as a major trend that’s likely to continue as fintechs, and those in other industries, look to expand the types of services they offer customers.
“I think we’re in a great rebundling,” Ashley Paston, an investor at Bain Capital Ventures, told Insider. “If you look in any fintech, they have expanded outside of their initial product to create more value for their end customer.”
Investors also see a rise of ‘finfluencers’ to help reach younger customers, especially after Step, a digital bank for teens, launched in partnership with TikTok star Charli D’Amelio. Since its rollout in October, the fintech has over 500,000 sign-ups and raised a $50 million Series B.
The past 12 months accelerated trends like mobile banking and digitization that have long been building in consumer banking. Both were part of a broader shift away from in-person branch visits as customers shunned human contact during the pandemic.
It’s no surprise, then, that as 2020 turns into 2021, predictions for what banks will prioritize revolve around further developing technological capabilities and online customer experience.
Digitization and cloud technology, as well as the broader consumer credit environment and cost-cutting measures, were top of mind when bank execs discussed their goals for the year ahead.
Many fintechs saw massive growth and adoption in 2020. There’s also been no shortage of funding. Private funding has surged with a record number of mega-rounds — $100 million and above — this year, according to a recent CBInsights report. And fintechs like Affirm and Marqeta are gearing up for IPOs.
Investors don’t see things cooling down any time soon.
“We’re very excited for some of our more mature companies for the exit environment that they’ll be seeing,” said Jay Ganatra, partner at PayPal Ventures, whose portfolio companies include personal finance app Acorns and earned wage access startup Even.
2020 was a big year for legal tech. As law firms and businesses across industries shifted to remote work, legal tech companies stepped in to offer digital solutions to help streamline the transition, from client relationship management to contract analysis.
Not since the last financial crisis has Jeff Feldman, a Chicago-based recruiter and consultant for financial advisors, seen such a frenetic year of activity.
2020 has been his second-busiest on record by volume, bested only by 2009. And he doesn’t see that slowing down. Today, Feldman’s roster of clients includes wealth managers First Republic, LPL Financial, RBC Capital Management, and Rockefeller Capital Management.
“I think you’re going to see a lot of movement in the first half” of next year, Feldman said. “Because of the past six months, advisors have taken this time to educate themselves on new business models — and the competition.”
One big change from 2020 that’s likely here to stay is the efficiency that has been introduced in the IPO roadshow process, according to Jane Dunlevie, co-head of Goldman Sachs’ global internet investment banking.
Traditionally, bankers hit the road leading up to an IPO to court investors and generate buzz. But the pandemic forced bankers to find creative virtual solutions for engaging investors without meeting them face-to-face.
“It’s been highly productive,” Dunlevie said. “We’re getting roadshows done in fewer days, for the most part, so we can cut off one or two or even three days of meetings, and these IPOs are getting done I think incredibly successfully.”
Aspects of that will likely continue.
“Our expectation is to try and take the best of both worlds, if and as the world reopens,” she said. That might mean management teams hit up one or two large cities, but “we can probably take many of these efficiencies into processes going forward.”