Fintech, cryptocurrencies, and mergers and acquisitions will overlap significantly in the coming year. M&A activity is expected to recover quickly – more than 60% of CEOs of major companies surveyed by FTI Consulting agree for their February report that their company has recently been the target of aggressive M&A activities, and 39% say they have companies seeing mergers and acquisitions. As a result of the COVID-19 pandemic. At the same time, the cryptocurrency market is gradually approaching normal acceptance.
As a result, the number of agreements related to cryptocurrency assets and their valuations is likely to increase during 2021. While this trend is likely to drive exciting developments in the financial sector, it has also begun to raise unique questions about cryptocurrency, and this complex business model can be assessed and verified. From him strictly versus the convention.
Digitizing the global economy
The impact of the COVID-19 pandemic has led to a significant shift from physical to digital services across a wide range of industries – no more dramatic than in the financial industry, with an estimated $ 420 billion in transaction value estimated at $ 7 trillion, according to S&P Global. Digital cards and payments by 2023 and will reach $ 48 trillion by 2030.
On the topic: How has the COVID-19 pandemic affected the crypto space? Expert response
PayPal legalized the cryptocurrency when it began accepting it in November 2020, and announced its acquisition of the Israeli cryptocurrency Startup Curv in March. Visa has also been active in the fintech space, most recently with its $ 5.3 billion acquisition of Plaid in January. Investors are also watching the developments following Coinbase’s debut on the Nasdaq exchange. Of course, all this activity generates a lot of interest in fintech companies and cryptocurrency companies among traditional financial institutions and big tech companies. Even in the middle of the lower market in the first half of 2020, cryptocurrency mergers and acquisitions reached $ 600 million, more than they were in the whole of 2019. All signs point to an even bigger year in 2021.
On the topic: Will PayPal’s crypto integration bring cryptocurrencies to masses? Expert response
The need for due diligence
Of course, with mergers and acquisitions, listing the stock market and raising capital also involves the need for due diligence and market evaluation and evaluation. However, when cryptocurrency is used as a primary asset or a significant resource, there are several complex layers of standard due diligence processes.
Target buyers and companies should consider making a technical assessment of the digital assets in use. Potential buyers will want to know how to verify crypto assets and ensure that the assets of the target company are accurate. Since cryptocurrency companies often operate on unconventional business models and due to the nature of distributed ledger systems, it is not always clear what happens. The essence of the problem is to inquire about any concerns, risks, or inaccuracies in the crypto assets, the structure and business model of the target company, and whether they have the right procedures to support their cryptocurrency activities.
Likewise, cryptocurrency companies looking to raise money or sell their business to a large technology or finance company (or apply for an IPO) can help position their business by conducting a thorough assessment that shows their differences and values to potential buyers. Support for follow-up evaluation and due diligence.
The nuances of the encryption room
Many people may not realize the importance of a technical assessment and a cryptocurrency valuation as part of greater financial due diligence, or even feasible. However, experts in the field have begun to develop sophisticated methods to conduct rapid, comprehensive, and cost-effective technical evaluation of cryptocurrency assets and use digital forensic techniques to test and verify digital wallet ownership and digital asset ownership and verify held assets. As well as the value of the assets and their validity.
When conducting a technical assessment focused on cryptocurrencies, buyers should explore the following many areas:
A full suite of digital assets including hot wallet services, cold wallet storage services, business portfolio services, wallet management and other services.
Size, location, responsibilities, and other important details related to technical support, sales support, and development teams.
The risks associated with contracts related to cryptocurrency, privacy, security, knowing your customer, money laundering, signatures, and other control policies.