Brex acquires three startups to enhance its offering and customer experience

Global Fintech m&a volume

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The US-based corporate credit card provider has purchased three companies — blockchain startup Neji, web publishing startup Compose Labs, and internal database company Landria, according to Business Insider. All deals closed between October last year and January, and the financials of the acquisitions were not disclosed.

With the help of these acquisitions, Brex can enhance its customer experience by improving security and analysis measures. Brex considers three types of acquisitions when looking to obtain a company: Acquihires to gain access to a firm’s talent; product acquisitions to leverage a company’s technology and intellectual property; and acquisitions that also focus on obtaining a firm’s customers and market share.

Its latest acquisitions all fall under the first two types, meaning they’ll enable Brex to enhance its products and services, in addition to having 12 new people join its company. Neji, for example, leverages distributed ledger technology (DLT) to protect customer data and enhance security for cyberattacks, which will help Brex secure the business cash management account that connects to the Brex Credit card.

By incorporating Compose Labs, Brex can better grasp and analyze the data from its e-commerce credit card, which has become a fast-growing business for Brex next to its flagship credit card. Lastly, Landria can be used to help Brex ensure transaction accuracy for customers.

We’ll likely see a drop in overall M&A activity as the coronavirus continues to negatively affect economies globally — but players might be able to scoop up companies for a lower price. Brex’s acquisitions closed before the pandemic, and we likely won’t see the company making any large acquisitions for the time being, as it should focus on sustainability during these uncertain economic times.

Overall, we’ll likely see M&A activity decline as players put growth and expansion plans on the backburner to remain operational during the crisis. We’ve already seen large banks, like Lloyds, cut staff due to coronavirus uncertainty, and a number of fintechs will probably have to make similar decisions, leaving no resources for acquisitions.

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That said, players that are still in a financial position to make acquisitions will likely be able to get a cheaper deal: The 58 global fintech unicorns will see a $76 billion drop in their valuation, per a report from Rosenblatt Securities, while VC funding will probably drop, causing smaller players to look for exits. However, buyers should still remain cautious with acquisitions at this time, as investments during a recession always come with higher risks.

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Source:: Business Insider – Finance

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