Acquihire is a familiar term in U.S. tech and financial circles. Now this new kind of takeover looks set to enter the Swiss market.
A great deal of money is trying to find a shrinking number of fintechs. At least that is what a study previously reported on by finews.com says. But it also means that the market for willing buyers is getting smaller for takeover-hungry banks and insurers.
«Established financial institutions have to urgently expand digital services. Acquiring fintechs and insurtechs helps with that and we expect it to continue here in Switzerland», says Alexander Grünwald (image below) in an interview with finews.com.
(Image: Houlihan Lokey)
Grünewald knows what he is talking about. The takeover specialist helped sell startups Bexio and Flatfox to Mobiliar insurance while at GCA Altium, which then also provided advice to Baloise when taking over the Movu, an online platform that helps people move home and provides related cleaning services. GCA Altium itself has since been integrated into U.S. competitor Houlihan Lokey and Grünwald now manages a Zurich office with 30 employees.
They are bringing their expertise in and that includes the practice of acquihire. It is an M&A strategy that companies as large as Apple have been employing, according to CNBC and Grünwald also sees it is an important trend. «Companies are bought in order to integrate talented employees», declares Scott Adelson (image below), Houlihan Lokey's Co-President, during the same interview.
Talent Over Technology?
Both the Mobiliar and Baloise acquisitions fit that description, Adelson indicates. «These kinds of deals are already very common in the U.S. and they will become increasingly important in Switzerland.»
Swiss private banks will not find all that much that is new in all of this. For years, they have been picking out advisory teams and assets under management instead of buying entire banks given all the uncertainties that can bring. Previously, when fintechs were sold, it was all about the technology, but that seems to be changing now.
Established banks and insurers have been digitalizing their activities in the past few years and they are being supported by fintechs that directly provide them with innovative technologies - a booming «B2B»-Segment in Switzerland.
(Image: Scottadelson.com)
Engineering Culture
This allows talented employees to effectively render the services of established financial institutions onto online platforms and a wide variety of digital formats. Tech is one of the few areas in Swiss banking where jobs are being created. And it is not out of nowhere that the two main Swiss banks, UBS and Credit Suisse, are trying to create a «culture of engineers» in their IT departments.
Grünwald is also looking for talent. «We want to expand the team», says the Managing Director. He also sits on the European management team of Houlihan Lokey's European subsidiary. According to him, the company already has a great deal of in-house expertise in Switzerland related to e-Commerce, tech. It also has extensive experience working with entrepreneurs and the private equity sector.
Direct Line to Private Equity
«In the future, we want to expand IPO advisory, industrial tech and healthcare in Switzerland, as we are already strong in those areas globally», he says.
Given its recent activities, Houlihan Lokey remains focused on small and medium sized Swiss companies while working closely with private market investors. But now it can bring its broad international network into play and Grünwald himself sees a rising interest from abroad for local enterprises - and their talent.
