Growing regulatory concerns could force banks to reverse decisions to take on fintech startups. This reflected in Swiss banking giant UBS’s decision to scrap a $1.4 billion takeover of venture-backed robo-adviser Wealthfront.<\/p>\n
Although the two companies said the decision to terminate the deal was based on “mutual agreement,” experts pointed out that terminating the deal would be detrimental to both companies.<\/p>\n
“From Wealthfront’s perspective, and with respect to what has happened to valuations to growth stocks, it’s not a valuation I would walk away from,” said David Goldstone, manager of investment research at Condor Capital.<\/p>\n
Questions surrounding the breakup of the deal offered no real insight into the motives behind the termination of the deal. However, Primack, a source familiar with the situation, said: “The deal collapse came suddenly, as reflected by Friday night’s terse announcement, with unspecified regulatory concerns being raised in just the past several weeks.”<\/p>\n
After the $1.4 billion deal collapsed, UBS decided instead to invest $69.7 million in the company at a valuation that Wealthfront described as $1.4 billion.<\/p>\n