The U.S.-based credit card provider has bought three companies – blockchain startup Neji, web publishing startup Compose Labs, and internal database company Landria Business insider. All deals were closed between October last year and January and the financial data of the acquisitions were not disclosed.
Business Insider Intelligence
With these acquisitions, Brex can improve the customer experience by improving security and analytics. Brex is considering three types of acquisitions to get a business: Acquisition to access a company's talent; Product acquisitions to leverage a company's technology and intellectual property; and acquisitions that also focus on winning a company's customers and market share.
The recent acquisitions all fall under the first two types, which means that Brex can't just improve its products and services 12th new people join his company. For example, Neji uses DLT (Distributed Ledger Technology) to protect customer data and improve security in the event of cyberattacks. This enables Brex to secure the Business Cash Management account associated with the Brex credit card.
The integration of Compose Labs enables Brex to better capture and analyze the data on its e-commerce credit card, which has become a rapidly growing business for Brex alongside its flagship credit card. Finally, Landria can be used to help Brex ensure transaction accuracy for customers.
We will likely see a decline in overall M&A activity as the corona virus continues to negatively impact economies worldwide – but players could potentially win companies at a lower price. The Brex acquisitions were completed prior to the pandemic and we are unlikely to see any major acquisitions of the company for now as it should focus on sustainability in these uncertain economic times.
Overall, M&A activity is likely to decline as players move growth and expansion plans into the background to remain operational during the crisis. We have seen big banks like that Lloyds, Corona virus cutbacks due to uncertainties, and a number of fintechs will likely have to make similar decisions, leaving no resources for acquisitions.
However, players who are still financially able to make acquisitions will likely be able to do a cheaper deal: The 58 global fintech unicorns will see a $ 76 billion decline in valuation, according to a Rosenblatt Securities report, while the VC- Financing will likely fall, causing smaller players to look for exits. However, buyers should continue to be cautious about acquisitions at this point as investments during a recession always involve higher risks.
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