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:
- 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.
- 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.