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Author: Sarah Thompson

Senior Counsel, Financial Regulation

How to Buy a Fintech Company License in Europe

Posted on by Sarah Thompson

Building a fintech company from scratch in Europe is a highly rewarding but time-consuming process. Securing an Electronic Money Institution (EMI) or Payment Institution (PI) license directly from regulators can take anywhere from 9 to 18 months.

To bypass these lengthy queues and enter the market faster, many investors and fintech founders choose to buy an existing, licensed company. However, acquiring a regulated entity in Europe comes with strict regulatory oversight, specifically the “Change in Control” procedure.

Key legal points

  • Regulators must approve the buyer. Local central banks (such as the Bank of Lithuania, BaFin, or CSSF) do not allow automatic transfers of licenses. You must pass a strict “fit and proper” assessment.
  • The “Change in Control” (CiC) process is mandatory. The buyer must submit a detailed notification to the regulator before the transaction can be closed.
  • Capital requirements must be maintained. The target company must meet regulatory minimum capital requirements at all times during and after the acquisition.
  • Local substance is non-negotiable. Even after the purchase, the fintech company must retain local directors, key compliance officers, and physical operations within the licensing country.

A successful acquisition is not just about signing a share purchase agreement (SPA). It requires transparent disclosure of your ultimate beneficial owners (UBOs), source of funds, and a solid 3-year business plan for the regulator.

Due diligence checklist

Use the checklist below to assess the target fintech company before making an offer:

  • License status and regulatory history
  • UBO and shareholder structure
  • History of regulatory audits and fines
  • Current AML/CTF policies and compliance level
  • Active banking partners and safeguarding accounts
  • Software ownership and IT infrastructure stability
  • Pending litigation or client complaints
  • Financial health and tax liabilities

Typical deal structure

Most fintech license acquisitions in Europe follow a two-stage process:

  1. Signing the Share Purchase Agreement (SPA): The parties agree on the price and terms, but the transaction is conditional upon receiving regulatory approval. The purchase funds are usually placed in an escrow account.
  2. Regulatory Approval & Closing: The buyer submits the Change in Control application. Once the central bank approves the new owners (which takes 3 to 6 months), the funds are released from escrow, and ownership is officially transferred.

Common pitfalls

  • Undisclosed regulatory issues: Buying a company with historical compliance breaches that could lead to license revocation later.
  • Losing banking partners: European banks and payment rails (SEPA/SWIFT) often reassess their risk when ownership changes and may close the target’s safeguarding accounts.
  • Unrealistic timelines: Assuming the transaction can be completed in a few weeks. The regulatory approval phase cannot be rushed.
  • Inadequate source of wealth proof: Failing to provide clear, audited documentation on where the acquisition funds originated.

Final takeaway

Acquiring an existing European fintech license is one of the fastest ways to launch your payment or crypto business. However, preparation is key. Conducting deep regulatory due diligence and structuring the deal through a secure escrow mechanism are essential steps to safeguarding your investment and securing greenlights from European regulators.

Fintech M&A Trends Shaping 2024

Posted on by Sarah Thompson

Navigating the New Era of Fintech Deals

The global fintech sector has transitioned from an era of hyper-growth at all costs to a disciplined focus on profitability, capital preservation, and strategic synergy. In 2024, Mergers and Acquisitions (M&A) are no longer just exit strategies; they have become the primary tool for market consolidation, geographical expansion, and acquiring robust regulatory infrastructure under tighter market conditions.

Key Market Dynamics

  • The Shift from Growth to Profitability: Buyers are heavily discounting cash-burning startups, prioritizing targets with proven unit economics, strong EBITDA margins, and sustainable recurring revenue.
  • Consolidation of Point Solutions: Financial institutions and large fintech platforms are acquiring smaller, specialized startups to build comprehensive “super-apps” and all-in-one corporate suites.
  • Regulatory Asset Acquisition: Acquiring existing licensed entities (such as EMI, PSD2, or FINTRAC MSBs) remains the fastest route to market entry, bypassing lengthy organic licensing cycles.
  • Distressed M&A and Fire Sales: Companies with short capital runways are increasingly opting for strategic mergers as an alternative to down-rounds or insolvency.

The successful transactions of 2024 are characterized by deeper, more rigorous operational and technical due diligence, ensuring integration risks are mitigated before closing.

Due Diligence Checklist for 2024 Buyers

Use the checklist below to assess the health of your fintech target prior to signing.

  • Regulatory compliance and historical audit logs
  • Technical debt, software scalability, and IP ownership
  • Customer concentration risk and churn rates
  • Quality of earnings (QofE) and recurring revenue models
  • Existing partner bank relationships and payment processing rails
  • Data privacy controls (GDPR, CCPA, and local legislation)
  • Key talent retention and change-in-control employment clauses

Strategic Deal Structures

Most buyers are structuring transactions to mitigate downside risks. We are seeing a significant rise in Earn-outs, where a portion of the purchase price is tied to future performance metrics, and Stock-for-Stock mergers, allowing both parties to share in the upside of the combined entity.

Outlook for the Remainder of 2024

The backlog of dry powder among private equity firms, combined with the strategic pressure on traditional banks to digitize, guarantees a highly active M&A pipeline. Companies that proactively prepare their compliance, clean up their cap tables, and clearly articulate their technological moat will command premium valuations in this consolidated market.

CASP vs VASP: Key Differences Explained

Posted on by Sarah Thompson

Why the shift from VASP to CASP matters

For years, cryptocurrency businesses globally operated under the VASP (Virtual Asset Service Provider) framework, established by the Financial Action Task Force (FATF). However, with the full implementation of Europe’s MiCA (Markets in Crypto-Assets) regulation, a new standard has emerged: CASP (Crypto-Asset Service Provider).

Understanding the differences between these two frameworks is crucial for fintech companies seeking to offer crypto services legally in European and global markets.

Key legal points

  • Scope of Activities: While VASP frameworks primarily focus on AML/CFT (Anti-Money Laundering) compliance, CASP introduces rigorous prudential requirements, consumer protection, and capital reserve rules.
  • Passporting Rights: A CASP license obtained in one EU member state can be “passported” across all EU/EEA countries, whereas VASP registrations are strictly local and country-specific.
  • Transition Period: Existing VASPs must transition to the CASP framework to continue offering services legally within European jurisdictions.
  • Liability: CASPs face stricter liability rules, including responsibility for lost client assets due to hacks or operational failures.

Operating as a VASP is no longer enough to scale internationally. Transitioning to a CASP license requires restructuring internal compliance, increasing minimum capital, and establishing local substance.

Technical differences: CASP vs VASP

Below is a quick comparison of how these two regulatory frameworks differ across key operational areas:

FeatureVASP (Virtual Asset Service Provider)CASP (Crypto-Asset Service Provider)
Primary RegulatorLocal Financial Intelligence Units (e.g., FIUs)National Competent Authorities (e.g., BaFin, CySEC)
Main FocusAML/CFT compliance and KYC checksComprehensive prudential supervision & consumer protection
Capital RequirementsTypically low or none (country-dependent)Range from €50,000 to €150,000+ depending on services
EU Passporting❌ No (requires separate registry in each country)Yes (one license for all EU/EEA markets)
Client Asset CustodyBasic security requirementsStrict segregation of client assets and mandatory custody rules

Due diligence checklist for licensing

Before applying for a CASP license or upgrading your existing VASP registration, ensure you have the following in place:

  • Minimum capital requirements aligned with your specific service category
  • Fit and proper assessment documentation for board members and key shareholders
  • Robust AML/CFT policies, including travel rule compliance solutions
  • Business continuity plans and IT infrastructure audit reports
  • Segregated bank accounts for client funds and corporate funds
  • Clear consumer disclosure templates and complaints-handling procedures

Typical licensing pathway

The transition or new application process generally follows these stages:

  1. Gap Analysis: Assessing your current VASP compliance policies against CASP standards.
  2. Entity Substance: Establishing a local physical presence, including local directors and compliance officers in the licensing jurisdiction.
  3. Application Drafting: Preparing detailed policies on custody, conflict of interest, and market abuse prevention.
  4. Submission & Review: Undergoing assessment by national regulators (which typically takes between 3 to 6 months).

Common pitfalls

  • Underestimating capital reserves: Failing to maintain the required capital buffers from day one.
  • Ignoring the transition deadlines: Waiting too long to upgrade an existing VASP registration, leading to service disruption.
  • Lack of local substance: Attempting to get a CASP license with a “shell company” without real physical presence or local employees.

Final takeaway

The evolution from VASP to CASP marks the maturity of the crypto-asset market. While the barrier to entry under the CASP framework is significantly higher, the benefits—such as full EU-wide passporting and increased trust from banking partners—are highly rewarding for fintech companies aiming for long-term growth.

Value of Clean Books in Fintech M&A and Fundraising

Posted on by Sarah Thompson

In the high-stakes world of fintech, growth metrics and proprietary technology often take center stage. Founders focus intensely on transaction volumes, user acquisition, and software scalability. However, when it comes to fundraising rounds or mergers and acquisitions (M&A), the absolute deal-maker—or deal-killer—is the quality of your financial records.

“Clean books” are not just an accounting requirement; they are a strategic asset that directly dictates your valuation and transaction speed.

Why Financial Transparency is Critical in Fintech

Unlike traditional industries, fintech companies operate under complex regulatory frameworks, managing client funds, processing partner fees, and navigating multi-jurisdictional tax laws. This complexity makes financial auditing a rigorous hurdle during due diligence.

If your books are messy, potential buyers and investors see risk. And in M&A, risk always equals a lower valuation.

Key Benefits of Clean Books

  • Accelerated Due Diligence: Messy financial records lead to endless back-and-forth questions. Clean books allow auditors to complete their work in weeks rather than months.
  • Preserved Valuation: Discovering discrepancies during due diligence gives buyers a reason to negotiate a “haircut” (reduction) on your initial valuation.
  • Stronger Negotiating Leverage: When your financials are pristine and transparent, you build immediate trust, signaling that the business is run with institutional-grade discipline.
  • Seamless Regulatory Compliance: Regulators in jurisdictions like Canada (FINTRAC) or Europe (under MiCA) require strict financial auditing for license transfers during acquisitions.

Financial Due Diligence Checklist

Ensure your financial operations are prepared for scrutiny with this foundational checklist:

  • Segregated Client Funds: Clear, verifiable separation between operational capital and customer funds.
  • Reconciled Transaction Ledgers: Error-free reconciliation between bank statements, internal databases, and payment gateway reports.
  • Clear Revenue Recognition: Compliance with standards (like IFRS 15 / ASC 606) regarding when and how revenue is recognized.
  • Historical Tax Compliance: Documentation of global tax liabilities, corporate tax filings, and local VAT/GST filings.
  • Clean Cap Table: An up-to-date capitalization table tracking all equity, options, and convertible notes.
  • Vendor & Partner Contracts: Auditable records of recurring software expenses, banking-as-a-service (BaaS) fees, and marketing spend.

Common Red Flags That Kill Deals

  • Undefined Customer Acquisition Cost (CAC): Inability to back up unit economics with hard financial data.
  • Co-mingled Capital: Using operational accounts to buffer fluctuating client float balances.
  • Belated Adjustments: Making significant retrospective changes to prior-year books during the active due diligence phase.

Final Takeaway

The best time to clean your books was the day you launched; the second best time is today. Do not wait for an LOI (Letter of Intent) to begin organizing your financials. By treating your accounting as a core product, you protect your hard-earned valuation and ensure that when the perfect buyer or investor arrives, you are ready to close.

Posted in M&A

How to Buy a Fintech Company License in Europe

Posted on by Sarah Thompson

Building a fintech company from scratch in Europe is a highly rewarding but time-consuming process. Securing an Electronic Money Institution (EMI) or Payment Institution (PI) license directly from regulators can take anywhere from 9 to 18 months.

To bypass these lengthy queues and enter the market faster, many investors and fintech founders choose to buy an existing, licensed company. However, acquiring a regulated entity in Europe comes with strict regulatory oversight, specifically the “Change in Control” procedure.

Key legal points

  • Regulators must approve the buyer. Local central banks (such as the Bank of Lithuania, BaFin, or CSSF) do not allow automatic transfers of licenses. You must pass a strict “fit and proper” assessment.
  • The “Change in Control” (CiC) process is mandatory. The buyer must submit a detailed notification to the regulator before the transaction can be closed.
  • Capital requirements must be maintained. The target company must meet regulatory minimum capital requirements at all times during and after the acquisition.
  • Local substance is non-negotiable. Even after the purchase, the fintech company must retain local directors, key compliance officers, and physical operations within the licensing country.

A successful acquisition is not just about signing a share purchase agreement (SPA). It requires transparent disclosure of your ultimate beneficial owners (UBOs), source of funds, and a solid 3-year business plan for the regulator.

Due diligence checklist

Use the checklist below to assess the target fintech company before making an offer:

  • License status and regulatory history
  • UBO and shareholder structure
  • History of regulatory audits and fines
  • Current AML/CTF policies and compliance level
  • Active banking partners and safeguarding accounts
  • Software ownership and IT infrastructure stability
  • Pending litigation or client complaints
  • Financial health and tax liabilities

Typical deal structure

Most fintech license acquisitions in Europe follow a two-stage process:

  1. Signing the Share Purchase Agreement (SPA): The parties agree on the price and terms, but the transaction is conditional upon receiving regulatory approval. The purchase funds are usually placed in an escrow account.
  2. Regulatory Approval & Closing: The buyer submits the Change in Control application. Once the central bank approves the new owners (which takes 3 to 6 months), the funds are released from escrow, and ownership is officially transferred.

Common pitfalls

  • Undisclosed regulatory issues: Buying a company with historical compliance breaches that could lead to license revocation later.
  • Losing banking partners: European banks and payment rails (SEPA/SWIFT) often reassess their risk when ownership changes and may close the target’s safeguarding accounts.
  • Unrealistic timelines: Assuming the transaction can be completed in a few weeks. The regulatory approval phase cannot be rushed.
  • Inadequate source of wealth proof: Failing to provide clear, audited documentation on where the acquisition funds originated.

Final takeaway

Acquiring an existing European fintech license is one of the fastest ways to launch your payment or crypto business. However, preparation is key. Conducting deep regulatory due diligence and structuring the deal through a secure escrow mechanism are essential steps to safeguarding your investment and securing greenlights from European regulators.

How to Buy a FINTRAC-Registered MSB in Canada

Posted on by Sarah Thompson

Why buyers look at existing MSBs

Building an MSB from scratch requires a full registration cycle with FINTRAC, documented policies and controls, and time to operationalize compliance. Buying an existing MSB can shorten time to market, provide an established compliance foundation, and—when done right—allow seamless continuation of client relationships and banking rails.

Key legal points

  • FINTRAC does not pre-approve transfers of ownership. A change in control must be reported and approved, and the new owners and key individuals may be assessed for suitability.
  • All material changes to the business, ownership, and control persons must be reported to FINTRAC within 30 days.
  • Continuity of the MSB registration number is not guaranteed—FINTRAC may issue a new registration.
  • Banking partners and payment rails require their own approvals for changes in control.

A well-structured acquisition focuses on compliance continuity, transparent disclosure, and early engagement with regulators and banking partners.

Due diligence checklist

Use the checklist below as a starting point for your review.

  • FINTRAC registration status and history
  • Ownership structure and beneficial owners
  • Compliance program, policies, and procedures
  • Transaction monitoring and alert management
  • Regulatory filings and past examination history
  • ML/TF risk assessment and risk ratings
  • Banking, PSP, and correspondent relationships
  • Litigation, enforcement, and regulatory matters

Typical deal structure

Most MSB acquisitions in Canada follow an asset purchase model, where the buyer acquires the assets of the business and applies for registration (or change in control approval) with FINTRAC. Escrow, indemnities, and transition services agreements are commonly used to manage regulatory and operational risks.

Common pitfalls

  • Assuming the MSB registration will automatically transfer.
  • Overlooking undisclosed regulatory issues or historical violations.
  • Underestimating the time required for regulatory and banking approvals.
  • Failing to retain key compliance personnel during transition.

Final takeaway

Buying an existing MSB can be a powerful shortcut—when the compliance foundation is solid and the deal is structured with regulatory realities in mind. Start with diligence, engage early with FINTRAC and your bank, and plan for a smooth transition.

Fintech M&A Trends Shaping 2024

Posted on by Sarah Thompson

Navigating the New Era of Fintech Deals

The global fintech sector has transitioned from an era of hyper-growth at all costs to a disciplined focus on profitability, capital preservation, and strategic synergy. In 2024, Mergers and Acquisitions (M&A) are no longer just exit strategies; they have become the primary tool for market consolidation, geographical expansion, and acquiring robust regulatory infrastructure under tighter market conditions.

Key Market Dynamics

  • The Shift from Growth to Profitability: Buyers are heavily discounting cash-burning startups, prioritizing targets with proven unit economics, strong EBITDA margins, and sustainable recurring revenue.
  • Consolidation of Point Solutions: Financial institutions and large fintech platforms are acquiring smaller, specialized startups to build comprehensive “super-apps” and all-in-one corporate suites.
  • Regulatory Asset Acquisition: Acquiring existing licensed entities (such as EMI, PSD2, or FINTRAC MSBs) remains the fastest route to market entry, bypassing lengthy organic licensing cycles.
  • Distressed M&A and Fire Sales: Companies with short capital runways are increasingly opting for strategic mergers as an alternative to down-rounds or insolvency.

The successful transactions of 2024 are characterized by deeper, more rigorous operational and technical due diligence, ensuring integration risks are mitigated before closing.

Due Diligence Checklist for 2024 Buyers

Use the checklist below to assess the health of your fintech target prior to signing.

  • Regulatory compliance and historical audit logs
  • Technical debt, software scalability, and IP ownership
  • Customer concentration risk and churn rates
  • Quality of earnings (QofE) and recurring revenue models
  • Existing partner bank relationships and payment processing rails
  • Data privacy controls (GDPR, CCPA, and local legislation)
  • Key talent retention and change-in-control employment clauses

Strategic Deal Structures

Most buyers are structuring transactions to mitigate downside risks. We are seeing a significant rise in Earn-outs, where a portion of the purchase price is tied to future performance metrics, and Stock-for-Stock mergers, allowing both parties to share in the upside of the combined entity.

Outlook for the Remainder of 2024

The backlog of dry powder among private equity firms, combined with the strategic pressure on traditional banks to digitize, guarantees a highly active M&A pipeline. Companies that proactively prepare their compliance, clean up their cap tables, and clearly articulate their technological moat will command premium valuations in this consolidated market.

CASP vs VASP: Key Differences Explained

Posted on by Sarah Thompson

Why the shift from VASP to CASP matters

For years, cryptocurrency businesses globally operated under the VASP (Virtual Asset Service Provider) framework, established by the Financial Action Task Force (FATF). However, with the full implementation of Europe’s MiCA (Markets in Crypto-Assets) regulation, a new standard has emerged: CASP (Crypto-Asset Service Provider).

Understanding the differences between these two frameworks is crucial for fintech companies seeking to offer crypto services legally in European and global markets.

Key legal points

  • Scope of Activities: While VASP frameworks primarily focus on AML/CFT (Anti-Money Laundering) compliance, CASP introduces rigorous prudential requirements, consumer protection, and capital reserve rules.
  • Passporting Rights: A CASP license obtained in one EU member state can be “passported” across all EU/EEA countries, whereas VASP registrations are strictly local and country-specific.
  • Transition Period: Existing VASPs must transition to the CASP framework to continue offering services legally within European jurisdictions.
  • Liability: CASPs face stricter liability rules, including responsibility for lost client assets due to hacks or operational failures.

Operating as a VASP is no longer enough to scale internationally. Transitioning to a CASP license requires restructuring internal compliance, increasing minimum capital, and establishing local substance.

Technical differences: CASP vs VASP

Below is a quick comparison of how these two regulatory frameworks differ across key operational areas:

FeatureVASP (Virtual Asset Service Provider)CASP (Crypto-Asset Service Provider)
Primary RegulatorLocal Financial Intelligence Units (e.g., FIUs)National Competent Authorities (e.g., BaFin, CySEC)
Main FocusAML/CFT compliance and KYC checksComprehensive prudential supervision & consumer protection
Capital RequirementsTypically low or none (country-dependent)Range from €50,000 to €150,000+ depending on services
EU Passporting❌ No (requires separate registry in each country)Yes (one license for all EU/EEA markets)
Client Asset CustodyBasic security requirementsStrict segregation of client assets and mandatory custody rules

Due diligence checklist for licensing

Before applying for a CASP license or upgrading your existing VASP registration, ensure you have the following in place:

  • Minimum capital requirements aligned with your specific service category
  • Fit and proper assessment documentation for board members and key shareholders
  • Robust AML/CFT policies, including travel rule compliance solutions
  • Business continuity plans and IT infrastructure audit reports
  • Segregated bank accounts for client funds and corporate funds
  • Clear consumer disclosure templates and complaints-handling procedures

Typical licensing pathway

The transition or new application process generally follows these stages:

  1. Gap Analysis: Assessing your current VASP compliance policies against CASP standards.
  2. Entity Substance: Establishing a local physical presence, including local directors and compliance officers in the licensing jurisdiction.
  3. Application Drafting: Preparing detailed policies on custody, conflict of interest, and market abuse prevention.
  4. Submission & Review: Undergoing assessment by national regulators (which typically takes between 3 to 6 months).

Common pitfalls

  • Underestimating capital reserves: Failing to maintain the required capital buffers from day one.
  • Ignoring the transition deadlines: Waiting too long to upgrade an existing VASP registration, leading to service disruption.
  • Lack of local substance: Attempting to get a CASP license with a “shell company” without real physical presence or local employees.

Final takeaway

The evolution from VASP to CASP marks the maturity of the crypto-asset market. While the barrier to entry under the CASP framework is significantly higher, the benefits—such as full EU-wide passporting and increased trust from banking partners—are highly rewarding for fintech companies aiming for long-term growth.

Value of Clean Books in Fintech M&A and Fundraising

Posted on by Sarah Thompson

In the high-stakes world of fintech, growth metrics and proprietary technology often take center stage. Founders focus intensely on transaction volumes, user acquisition, and software scalability. However, when it comes to fundraising rounds or mergers and acquisitions (M&A), the absolute deal-maker—or deal-killer—is the quality of your financial records.

“Clean books” are not just an accounting requirement; they are a strategic asset that directly dictates your valuation and transaction speed.

Why Financial Transparency is Critical in Fintech

Unlike traditional industries, fintech companies operate under complex regulatory frameworks, managing client funds, processing partner fees, and navigating multi-jurisdictional tax laws. This complexity makes financial auditing a rigorous hurdle during due diligence.

If your books are messy, potential buyers and investors see risk. And in M&A, risk always equals a lower valuation.

Key Benefits of Clean Books

  • Accelerated Due Diligence: Messy financial records lead to endless back-and-forth questions. Clean books allow auditors to complete their work in weeks rather than months.
  • Preserved Valuation: Discovering discrepancies during due diligence gives buyers a reason to negotiate a “haircut” (reduction) on your initial valuation.
  • Stronger Negotiating Leverage: When your financials are pristine and transparent, you build immediate trust, signaling that the business is run with institutional-grade discipline.
  • Seamless Regulatory Compliance: Regulators in jurisdictions like Canada (FINTRAC) or Europe (under MiCA) require strict financial auditing for license transfers during acquisitions.

Financial Due Diligence Checklist

Ensure your financial operations are prepared for scrutiny with this foundational checklist:

  • Segregated Client Funds: Clear, verifiable separation between operational capital and customer funds.
  • Reconciled Transaction Ledgers: Error-free reconciliation between bank statements, internal databases, and payment gateway reports.
  • Clear Revenue Recognition: Compliance with standards (like IFRS 15 / ASC 606) regarding when and how revenue is recognized.
  • Historical Tax Compliance: Documentation of global tax liabilities, corporate tax filings, and local VAT/GST filings.
  • Clean Cap Table: An up-to-date capitalization table tracking all equity, options, and convertible notes.
  • Vendor & Partner Contracts: Auditable records of recurring software expenses, banking-as-a-service (BaaS) fees, and marketing spend.

Common Red Flags That Kill Deals

  • Undefined Customer Acquisition Cost (CAC): Inability to back up unit economics with hard financial data.
  • Co-mingled Capital: Using operational accounts to buffer fluctuating client float balances.
  • Belated Adjustments: Making significant retrospective changes to prior-year books during the active due diligence phase.

Final Takeaway

The best time to clean your books was the day you launched; the second best time is today. Do not wait for an LOI (Letter of Intent) to begin organizing your financials. By treating your accounting as a core product, you protect your hard-earned valuation and ensure that when the perfect buyer or investor arrives, you are ready to close.

Posted in M&A

How to Buy a Fintech Company License in Europe

Posted on by Sarah Thompson

Building a fintech company from scratch in Europe is a highly rewarding but time-consuming process. Securing an Electronic Money Institution (EMI) or Payment Institution (PI) license directly from regulators can take anywhere from 9 to 18 months.

To bypass these lengthy queues and enter the market faster, many investors and fintech founders choose to buy an existing, licensed company. However, acquiring a regulated entity in Europe comes with strict regulatory oversight, specifically the “Change in Control” procedure.

Key legal points

  • Regulators must approve the buyer. Local central banks (such as the Bank of Lithuania, BaFin, or CSSF) do not allow automatic transfers of licenses. You must pass a strict “fit and proper” assessment.
  • The “Change in Control” (CiC) process is mandatory. The buyer must submit a detailed notification to the regulator before the transaction can be closed.
  • Capital requirements must be maintained. The target company must meet regulatory minimum capital requirements at all times during and after the acquisition.
  • Local substance is non-negotiable. Even after the purchase, the fintech company must retain local directors, key compliance officers, and physical operations within the licensing country.

A successful acquisition is not just about signing a share purchase agreement (SPA). It requires transparent disclosure of your ultimate beneficial owners (UBOs), source of funds, and a solid 3-year business plan for the regulator.

Due diligence checklist

Use the checklist below to assess the target fintech company before making an offer:

  • License status and regulatory history
  • UBO and shareholder structure
  • History of regulatory audits and fines
  • Current AML/CTF policies and compliance level
  • Active banking partners and safeguarding accounts
  • Software ownership and IT infrastructure stability
  • Pending litigation or client complaints
  • Financial health and tax liabilities

Typical deal structure

Most fintech license acquisitions in Europe follow a two-stage process:

  1. Signing the Share Purchase Agreement (SPA): The parties agree on the price and terms, but the transaction is conditional upon receiving regulatory approval. The purchase funds are usually placed in an escrow account.
  2. Regulatory Approval & Closing: The buyer submits the Change in Control application. Once the central bank approves the new owners (which takes 3 to 6 months), the funds are released from escrow, and ownership is officially transferred.

Common pitfalls

  • Undisclosed regulatory issues: Buying a company with historical compliance breaches that could lead to license revocation later.
  • Losing banking partners: European banks and payment rails (SEPA/SWIFT) often reassess their risk when ownership changes and may close the target’s safeguarding accounts.
  • Unrealistic timelines: Assuming the transaction can be completed in a few weeks. The regulatory approval phase cannot be rushed.
  • Inadequate source of wealth proof: Failing to provide clear, audited documentation on where the acquisition funds originated.

Final takeaway

Acquiring an existing European fintech license is one of the fastest ways to launch your payment or crypto business. However, preparation is key. Conducting deep regulatory due diligence and structuring the deal through a secure escrow mechanism are essential steps to safeguarding your investment and securing greenlights from European regulators.

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