Luma Financial Technologies — M&A Strategy Playbook

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Section 1 — M&A Strategy

The strategic criteria. Why are we doing M&A? How does it align to Luma's broader strategy?

1.1 Stage 1 - Strategic Filter - How does M&A align to Luma's Strategy

Every M&A decision needs to align to Luma's two core strategic drivers.

Driver 1 — Ecosystem Focus. To become a 'Global Platform Ecosystem' with a clear vision to own our ecosystem rather than simply participate in one. All our projects should strengthen network effects and create switching costs.

Our 'minimum viable ecosystem' is where participants cannot operate without us, switching costs become insurmountable and pull factors drive the sales process (buy-side on → sell-side on; carriers on → issuers on).

Driver 2 — Play to Win. Achieving #1 or #2 market positions in our chosen segments. This means we should rule out the 'legitimate rationale' deals that are profitable but won't advance market leadership and align to those that will.

M&A is an important mechanism to compress a 5+ year organic path into 2–3 years, speed is critical before competitors do the same.

1.2 Alignment to IPO Narrative

Every M&A decision must also strengthen a potential exit/IPO story. The ambition is in 18–24 month vision to achieve $100M+ revenue and maintain a >50% growth rate. Additionally the following factors will strengthen the IPO narrative.

• Multi-product platform. A single operating system for SP + Annuities + Life Insurance + Portfolio Solutions.
• Global, not US-only. Successful EMEA expansion will demonstrate global credentials and commands premium multiples.
• In-house M&A execution capability. $100M deployed with 3 clean integrations is better than a larger half-integrated deal.
• Platform M&As — not a rollup. We want to create a premium for demonstrating network effects, not just acquiring revenue.

The Path to $100m delivers the revenue number, the IPO narrative will help drive the multiple!!

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Stage 2 — Ecosystem Filter - How does the target support the Luma ecosystem

What must a deal additionally satisfy? How do ensure we identify the targets that are best for Luma?

Acquisitions must additionally be evaluated on these criteria below (and avoid the explicit NOs).

2.1 Network Effects

• Theory: Platforms are more valuable as more participants join (Metcalfe's Law). Product-specific data silos are an enemy of the network effect.
• Luma targets: Strengthen the multi-sided network connecting advisors, issuers, carriers, and end clients. Prioritise targets that add complementary participants or eliminate a data silo.

2.2 Parenting Advantage Framework

• Theory: Luma must be the best-fit acquirer for the target. At least one of Luma's competitive advantages must directly address one of the target's most important needs — something they cannot achieve on their own or under a different owner. Without this, the acquired typically end up being the winners in terms of valuation; with it, Luma adds value beyond what competitors can.
• Luma's competitive advantages:
  • Best-in-class integration capabilities / issuer connectivity
  • Global & cross-channel reach & distribution
  • Unified platform architecture across Structured Products and Annuities
  • Buy-side objectivity and multi-issuer approach

2.3 Ecosystem Lock-In

• Theory: Own the layers that create switching costs and network lock-in effects.
• Luma targets: Prioritise approaches where Luma can control critical ecosystem components (data, workflows, compliance, distribution, etc).

2.4 Explicit NOs

• No rollup for rollup's sake — every deal must improve platform value for existing users and exploit synergies with Luma.
• No distressed assets with reputational risk.

Detailed due diligence framework and the Five Gates are covered in the Due Diligence Playbook.

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Stage 3 — The Execution Decision - Buy, Build or Partner

Once a deal clears the strategic and ecosystem filters, we also need to determine HOW we execute it?

The sections above help determine what we should pursue — the strategic alignemnt and the criteria checks (network effects, parenting advantage, ecosystem lock-in). This assesses how we execute: buy, build internally or partner / JV.

At a high level the key factors that can drive this decision can be summarised:

• Value of the IP. Is it differentiable, can we preserve that value, and does it form part of a critical lock-in strategy? — i.e. do we want to own it?
• Speed to market. Is speed critical? Can we build it — do we have the skills?
• Fit. Cultural fit, integration complexity, and parenting fit — do Luma's competitive strengths advance the value of the target?

3.1 Buy

Acquire when:

• Speed to market is critical (18+ months saved)
• Technology / IP would take long to replicate
• Consolidation to achieve market leadership (#1 or #2 position)
• Strong cultural fit and talent acquisition more valuable than the asset
• Prevents a competitor from acquiring

3.2 Build

Build internally when:

• Core platform features (Luma's competitive advantage)
• Proprietary analytics or high customisation required
• Client-facing UX unique to Luma's brand
• Deep integration with existing architecture
• Examples: Data schema and API connectivity, LIA, AI / analytics capabilities

3.3 Partner

Partner / JV when:

• We only need part of their capabilities without full ownership
• Testing new geographic regions or product categories to share risk
• Technology is mature and widely available — little proprietary IP
• Target is too large or too expensive to acquire
• Integration complexity is low (API-first)
• We want to avoid complications of ownership (culture clashes, attrition due to duplication, regulatory)

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Section 4 — Internal M&A Capability

Luma's internal M&A capability will be an important strength in the future. Where we need to hire?

4.1 Current Team & Roles

The M&A programme is currently primarily managed by:

• Tim Bonacci (CEO)
• Gim Lau (COO)
• Ash (Consultant)

4.2 Critical Team Gaps

Gap #1 — Deal execution capacity. The ELT is currently running the full M&A process — a potential bandwidth bottleneck. A full-time Corp Dev Lead would absorb this.

Profile: Ex-investment banker who has moved into a growth-stage tech company. Closed AND integrated deals in the $15–50M range, ideally fintech.

Gap #2 — Dedicated integration manager. Without a dedicated Integration PM, integration defaults to the product team, who are already at capacity.

Profile: Technical programme manager from a tech company. Technical enough to understand API integration and data migration — not an engineer. Can operate with the product team seamlessly.

Gap #3 — Engineering capacity. Engineers cannot simultaneously maintain the platform, build the tools, and integrate. Hire 6–8 integration engineers before first close, funded from the M&A budget.

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Section 5 — Potential Risks

What could go wrong? What's the contingency?

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