Payments Industry Portfolio & Platform Valuations
Determining Opportunity Value
Assisting our clients in determining the value of an opportunity, whether as a seller or buyer, is one of our most frequently requested services. Based on our assessment of the opportunity’s finances, revenue projections, and a historical analysis of comparable opportunity types and transactions, we are fully equipped to provide our clients with the highest quality guidance in establishing what any given opportunity is ‘worth’, whether that be portfolio, processing or payment technology platform.Comprehensive Valuations (Portfolio or Processing/Technology Platform)
Payment processing platforms and merchant processing portfolios are unique acquisition opportunities. As such, traditional business valuation methodologies are not applicable. Additionally, buyers and sellers aren’t often accustomed to being able to identify where the underlying risk involved in these types of transactions originates from, and why. Therefore, for larger portfolio and processing platform acquisitions particularly, in addition to accurately modeling the future cash flows, it’s advisable to run a comprehensive diagnostic analysis of the underlying asset or processing portfolio to determine how the various portfolio attributes AFFECT the revenue growth or loss (attrition) of the opportunity.
Attribute Diagnostics Typically Include:
- Contract analysis (account pricing, portability, exclusivity)
- Risk concentration analysis (% revenue contribution of accounts)
- Account composition analysis
- Vintage analysis (account age vs. revenue contribution)
- Geographic distribution analysis
- Attrition ‘Frame’ analysis (acceleration or deceleration of revenue loss)
Snapshot Valuations (Portfolio ONLY)
This type of valuation is perfect for small ISO and ISO Agent portfolios, and for clients who are entertaining the idea of putting their portfolio to market and want to get a quick read on what they could expect in a transaction. Based on the modeling of future cash flows, this process aims to determine the ‘max-buy’ value for a portfolio or residual opportunity (the maximum price a prospective buyer could pay) based on the rate of revenue growth or loss, and the formulation and application of the appropriate discount rate (comprised of the estimated cost of capital and risk premium attributable to opportunities with similar characteristics).Turnaround time for Snapshot valuations is usually less than 48 hours.
