Fintech M&A 2025: Harvesting Exits and Sourcing New Deal Flow

As 2025 draws to a close, investors find themselves at a pivotal juncture. A resurgence in fintech M&A activity is creating both portfolio harvesting opportunities and fueling new deal flow. Early-stage VC and growth equity partners are navigating an environment of renewed consolidation momentum, normalized valuation benchmarks, and proactive strategic buyers. In this investor-centric newsletter, we explore how increased M&A activity is shaping exit windows and investment openings.

Fintech M&A Momentum: A Resurgent Deal Environment

After a relatively subdued period in 2022–2023, fintech M&A activity has come roaring back in 2025. Global dealmaking has rebounded to its highest levels since late 2021, reflecting improved CEO confidence and stabilizing capital markets. In the fintech sector specifically, deal volumes have climbed steadily. September 2025 alone saw 80 fintech M&A deals worldwide, up 5.3% year-over-year, powered by strategic consolidation moves, new tech innovation (e.g. AI integration), and regulatory tailwinds. Year-to-date, 859 fintech M&A deals have been recorded globally – a 4.4% increase over 2024’s pace. This sustained momentum underscores the sector’s resilience despite macroeconomic uncertainties.

North America continues to dominate fintech deal activity (accounting for about 60% of volume), with Europe and Asia-Pacific contributing roughly 25% and 12% respectively. The broad resurgence in M&A can be attributed to a confluence of factors creating a fertile environment for deals: abundant private capital (an estimated $3.6 trillion in “dry powder” globally) fueling acquisitions, advances in AI and digital finance driving strategic interest, and easing regulatory pressures (e.g. deregulatory policies in the U.S. and open banking in the EU) reducing friction for mergers.

In short, market conditions in late 2025 are aligning to support a wave of fintech consolidation, providing a timely window for investors to execute on exits or acquisitions.

Sector Valuation Benchmarks: Normalizing, But Opportunities Vary

With the pickup in deal activity, fintech valuation multiples have moderated from the frothy peaks of a few years ago, settling into more rational ranges. Investors are now placing greater emphasis on sustainable growth and profitability, and the pricing of recent deals reflects this discipline.

In Q3 2025, the average fintech M&A valuation stood around ~4.2× revenue and ~12.1× EBITDA. These averages mark a slight compression from 2021 highs, indicating that buyers (both strategic and financial) are insisting on realistic pricing and focusing on operational efficiency and earnings quality.

Crucially, valuation benchmarks differ across fintech sub-sectors, so investors must calibrate expectations by domain. For example, payments and lending fintech companies often command higher revenue multiples than other areas. Payments businesses – with their scalable transaction volumes and recurring revenue models – typically trade around 5× to 10× forward revenue in today’s market. By contrast, fintech lenders, which balance growth with credit risk, tend to see valuations in the 3× to 7× revenue range. Wealth management startups can also fetch robust multiples (often mid-to-high single-digit revenues) when they demonstrate innovative platforms and strong AUM or revenue growth, attracting strategic buyers looking to modernize wealth services. Meanwhile, InsurTech firms generally face lower multiples (insurers are valued more on earnings and risk), but those that prove out efficient, scalable digital models can still achieve premium valuations in acquisitions.

Even within fintech, certain niches continue to garner outlier valuations. A prime example is the blockchain/crypto segment, where high-growth potential and emerging tech appeal have driven revenue multiples into the low-teens. Recent analyses show blockchain-focused fintech firms averaging roughly 15.2× EV/Revenue – far above the sector norm – thanks to investor enthusiasm for DeFi, crypto trading platforms, and underlying blockchain innovations. These exceptions aside, the overall trend is one of valuation sanity: fintech deal multiples in 2025 reflect tempered growth expectations and a pivot toward profitability. For investors evaluating exit opportunities, understanding these sector-specific benchmarks is critical for setting realistic price targets and negotiating deals. Gone are the days of growth-at-any-price; today’s buyers want healthy unit economics and clear paths to cash flow, and valuation multiples now align accordingly with quality of earnings and growth durability.

Strategic Buyers Driving Deals: Consolidation Logic and Behavior

One striking feature of 2025’s fintech M&A wave is the dominance of strategic buyers. Industry incumbents – established banks, insurers, payment processors, and large tech-finance players – are leading the charge in acquiring fintech companies to bolster their own capabilities. In fact, strategic acquirers account for the vast majority of deal value this year. An analysis of large fintech transactions (>$100M) in 2025 showed that approximately 95% of total deal value came from strategic buyers, not financial sponsors. These buyers are pursuing acquisitions with a clear strategic rationale: filling product gaps, accelerating digital innovation, and expanding into new customer segments via fintech integrations.

What about private equity and financial sponsors? After a quiet spell during the high-interest-rate crunch, PE firms are gradually re-entering the fintech M&A arena as well, though typically in a selective manner. Improved financing conditions and more reasonable valuations have lured PE buyers back to tech deals broadly, and fintech is part of this trend. While strategics still outbid PE on many larger fintech targets in 2025, sponsors are actively looking for buyouts or significant minority investments in fintech companies where they see potential for value creation (for instance, through roll-ups or efficiency improvements). By Q3 2025, globally financial sponsors were participating in roughly 1 out of every 7 tech M&A deals (the rest strategic), indicating that PE interest in the sector is rebounding alongside strategics. Both types of buyers share a common perspective: fintech has matured into a consolidation play, and acquiring the right assets now can yield significant competitive advantage. Investors should note this buyer landscape because it affects exit optionality – a strong fintech business with good metrics might field interest from multiple strategics (and occasionally PE bidders), creating a seller’s market for quality assets even if IPOs remain scarce.

Market Windows for Exits: Harvesting Portfolio Value

For venture capital and growth equity investors holding fintech positions, the current climate presents a timely portfolio harvesting opportunity. The uptick in M&A appetite means many fintech startups that survived the lean years are now viable acquisition candidates, often at reasonable-to-attractive valuations. As an investor, deciding when to realize returns (harvest) from portfolio companies is a nuanced exercise, but the present M&A window is certainly worth serious consideration for mature fintech assets. With market momentum behind it, 2025 has in many ways become “the next chapter in the fintech story – not about the next unicorn, but about the next wave of exits” that will reshape the ecosystem. In other words, the narrative has shifted from holding out for IPOs to engineering strategic exits, and that shift aligns well with LPs’ desire to see liquidity on the horizon

Final Reflection: Year-End Alignment with LP Expectations

As we approach the end of 2025, venture and private equity investors in fintech must balance optimism with prudence. The renewed M&A momentum offers a chance to deliver liquidity to Limited Partners after a lean period, a welcome development for LPs eager to see distributions.

Above all, aligning decisions with LP interests is paramount. LPs entrust GPs to both capture returns and manage risk. In practice, this might involve securing an exit at a decent multiple now for a mature portfolio company – even if it’s not a sky-high price – to lock in a win and return capital. It also involves transparently communicating how new investments in areas like AI-driven fintech or RegTech today are being made with an eye on tangible exit pathways (be it M&A or a revived IPO market) in the next 2–4 years. Given the improving environment, investors should avoid complacency; windows can close, and valuations can shift if macro conditions change. The close of 2025 is an apt time to revisit portfolio strategies, ensure that any realistic harvests are in motion, and double down on the highest-conviction new deals that fit the themes driving consolidation.

Don’t Be Shy

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Tom C. Schapira
Founder and CEO
Imagine Capital Group
E: [email protected]
Website: http://www.imaginecapitalgroup.com

Securities Offered through Wellesley Hills Securities. Member FINRA/SIPC