Green Sheet interviews NSI Insurance Group's Jason Bishara

Private fintech valuations, particularly in the payments sector, have surged to unprecedented levels, with some deals fetching six times annual revenue. To understand what's driving this wave of optimism—and whether today's lofty multiples can endure amid regulatory uncertainty and higher borrowing costs—The Green Sheet touched base with Jason Bishara, Financial Practice Leader at NSI Insurance Group.

In this Q&A, Bishara discusses the balance between fundamentals and sentiment shaping current dealmaking, the governance pitfalls common in fast-closing fintech transactions, and how evolving insurance instruments are reshaping risk allocation between buyers and sellers.

Green Sheet: Private fintech valuations—especially in payments—are hitting record multiples. What specific factors are fueling this optimism among buyers, and to what extent is it driven by fundamentals versus sentiment or competitive pressure?

Jason Bishara: Drivers of optimism in payments valuations include:

• Recurring revenue and high retention: Payment firms, especially B2B and SaaS-enabled processors, exhibit stable, predictable cash flows with high customer stickiness. PE targets these business models across many industries.

• Expansion of embedded finance: Integration of financial services into non-financial platforms (for example, marketplaces, CRMs) is fueling growth, attracting higher multiples.

• AI and data monetization hype: Payments data is increasingly seen as a goldmine for underwriting, personalization, and fraud detection—pushing future revenue expectations.

• Strategic buyer FOMO (fear of missing out): Corporates and PE buyers feel pressured to secure early access to proprietary tech stacks, distribution networks, or compliance-ready platforms.

Fundamentals versus sentiment:

• Approximately. 60/40 split: While strong growth and fundamentals play a central role, the pace and premiums in many deals appear driven by sentiment, scarcity, and competitive pressure — particularly from growth-equity funds and strategic acquirers racing to lock in capabilities before valuations climb further. This is extremely similar to what is occurring in the insurance market.

GS: How sustainable are today's six-times-revenue multiples if interest rates stay elevated or regulators tighten oversight of embedded finance, digital assets, or cross-border payment rails in 2026? 

JB: Under elevated rates and tighter regulation—2026 outlook:

• Valuations will normalize: If interest rates remain high or rise further into 2026, the cost of capital will exert downward pressure on multiples — particularly for non-profitable or capital-intensive fintechs.

• Embedded finance under scrutiny: Regulatory tightening (especially in the U.S. and EU) around banking-as-a-service (BaaS), KYC/AML obligations, would materially impact embedded finance players' economics. However, I would not expect any radical regulatory changes over the next 12 months with the current administration.

• Digital assets and cross-border rails: Geopolitical tensions and compliance risks (for example, sanctions enforcement, data localization) could make cross-border payment models riskier, thereby warranting valuation discounts.

Sustainability outlook: Six-times-revenue multiples may hold only for high-quality, regulatory-resilient firms with defensible margins and proprietary tech. The rest will likely face compression toward 3–5x revenue unless growth accelerates meaningfully. However, I would emphasize I feel the current market will be sustainable for at least 12 months.

GS: What are the most common governance or disclosure blind spots you're seeing in high-velocity fintech deals, particularly among payments firms eager to close quickly?

JB: Common governance and disclosure issues in fast-closing fintech deals include:

• Inadequate compliance documentation: Many payments firms fail to provide auditable logs of KYC/KYB procedures, exposing acquirers to latent regulatory risks.

• Shadow vendors and tech debt: Over-reliance on unvetted third-party APIs, offshore developers or patchwork infrastructure can be buried in deal narratives. This is extremely common with rapidly growing tech companies: "A violently executed plan today is better than a perfectly executed plan tomorrow."

• Limited board oversight: Founder-led startups often lack independent directors or risk committees, raising red flags for post-deal integration and fiduciary governance.

• Poor disclosure around customer concentration or attrition: Some deals obscure revenue dependence on a few major clients, or fail to disclose upcoming contract cliffs.

GS: How have changes in due-diligence standards and insurance instruments (like D&O or cyber liability coverage) altered risk allocation between buyers and sellers in fintech M&A?

JB: Shifts in due diligence and insurance include:

• More granular tech & cyber diligence: Buyers now demand full-stack audits—not just penetration tests, but also codebase lineage, dev access logs, and scalability assessments.

• D&O and cyber liability coverage: These instruments have become negotiation levers. Buyers increasingly demand extended tail coverage or raise indemnity caps tied to specific risk areas (for example, data breaches, compliance failures). If structured properly the tail and the go-forward coverage can be negotiated as a single transaction saving a considerable amount of money and provide broader coverage.

• Escrow and reps & warranties (R&W) insurance: R&W policies have become more sophisticated, often tied to regulatory compliance and IP ownership, shifting risk but also increasing the diligence bar. In my opinion, R&W coverage is the key to a successful transaction. Deals are 80 percent more likely to close when R&W coverage is in place. When the insurance underwriter are brought in early they can bridge the gap between the buyer and seller and then both parties get to layoff their risk to the carrier. R&W coverage closes deals.

Bottom Line: Buyers are using insurance more as a strategic tool to shift downside risk—but in doing so, are enforcing higher standards during diligence. The higher standards are being driven by the underwriters but both sides tend to accept the terms. It is like having a mediateor for your transaction.

Notice to readers: These are archived articles. Contact information, links and other details may be out of date. We regret any inconvenience.