Almost half of the largest financial technology deals in 2018 were private equity buyouts, and that might continue in 2019.

Blackstone Group LP led an investor group's $17.3 billion carve-out of Thomson Reuters Corp.'s financial and risk business. Affiliates of funds managed by Carlyle Group LP acquired a majority stake in insurtech company Sedgwick Claims Management Services Inc. for $6.7 billion, the second-largest deal of the year. Rounding out the top three, an investor group bought Dun & Bradstreet Corp. for $5.5 billion. Another six deals in the top 20 involved at least one private equity buyer.

The elevated private equity activity is not unique to the fintech industry, said Justin King, partner at King & Spalding who specializes in mergers, acquisitions and other significant corporate transactions.

"The private equity firms have a lot of dry powder, they have a lot of momentum, they're hungry for deals, the funds are getting bigger and there are more and more private equity firms popping up," King said in an interview. "It is a very hot market."

Carlyle, for example, closed its seventh flagship buyout fund at $18.5 billion in July 2018, blowing past a $15 billion fundraising target.

Only two companies were involved in more than one of the top 20 deals for the year: SS&C Technologies Holdings Inc. and private equity shop Silver Lake Partners. SS&C Technologies acquired DST Systems Inc. in January 2018 for $5.1 billion and bought Eze Software Group LLC in July 2018 for $1.5 billion. Silver Lake Partners bought Credit Karma Inc. in March for $500 million and, along with P2 Capital Partners LLC, paid $3.1 billion to take Blackhawk Network Holdings Inc. private.

Industry experts continue to highlight payments as an area ripe for consolidation. Seven of the year's largest deals fell within the payments landscape, followed by six deals in financial media and data solutions. Blackhawk Network's go-private deal was the largest in the payments sector. Notably, PayPal Holdings Inc. acquired Sweden-based iZettle AB for $2.2 billion, the largest deal PayPal has executed to date.

At the company's investor day in May 2018, PayPal executives detailed plans to continue expanding the company's foothold in the $110 trillion addressable payment processor market. President and CEO Daniel Schulman said his company is the only digital wallet that controls the end-to-end process. PayPal plans to pursue several deals valued between $1 billion and $3 billion in each of the next several years, executives said.

King & Spalding's King expects the larger, more established payments companies to seek out lower- and middle-tier fintechs in 2019. There is also potential for "tangential or nice tuck-in acquisition opportunities," King said.

But valuations in 2018 skyrocketed above those of recent years. The fourth and second quarters of 2018 saw the highest median transaction value since at least the beginning of 2014. The median transaction value in the fourth quarter was close to $90 million, compared to the less than $25 million median value in most quarters over that time.

It is difficult to say valuations are "overinflated," though, as there is still demand at these high prices, said Volker Schloenvoigt, principal at Edgar, Dunn & Company. Schloenvoigt, who heads the consulting firm's European acquiring practice and focuses mostly on the payments space, attributed high valuations to increased competition from investors. Many investors, particularly in payments, are "playing catch-up" and are willing to pay potentially more for a company than it is worth, he said.

"You ultimately get to a point where the valuations cannot increase any further because it just does not make economic sense for an investor to pay the money that is necessary to close the deal," Schloenvoigt said in an interview.

Multiples that were paid and valuations that were on the table over the last few years have gotten to "ridiculous levels, especially on the startup side, where you have companies that are not really profitable for a long period of time, if they're profitable at all," Schloenvoigt said. Although the valuations "very often do not make sense," they are high because investors are trying to outbid each other, he said.

"I wouldn't be able to say where that cutoff point is when those valuations start to come down. It might well be past 2019," he said. "But there has to be a point where valuations become slightly more meaningful."