Post-Pandemic ISO Valuation Drivers
Merger and acquisition activity for payment processors, merchant acquirers, ISOs and large merchant level salesperson/agent offices is picking up after the extraordinary business challenges of this past year. For the select few whose business models cater to higher risk and online merchants, the uptick in M&A activity is a continuation of the past year.
I’ve Secured Growth Capital for My Payments Company – How Do I Optimize Investment Monies to Maximize Value?
Merchant acquirers have always caught the attention of investors looking to put capital to work. Recurring, predictable revenue will capture the eye of any sharp investor, and for well over a decade now, investor interest has in no uncertain terms taken root in the merchant processing space. Consequentially, this has presented a rather steady flow of opportunities for ISO owners, third party processors, agent offices, and merchant level salespersons (“MLSs”). In fact, any level of acquirer who has built a quality merchant portfolio, and owns a piece, if not all, of the residual stream of the same, has the ability to (generally) avail themselves of outside investor capital. This readily available supply and access to capital provides acquirers very real opportunities to grow their businesses, “grease the skids” for long-term value creation, and leverage themselves nicely for further investment or outright exit.
Selling Your Merchant Processing ISO: 5 Things That Make Your ISO More Attractive To Buyers
As the times change, so too do our perceptions of what is good and bad. And just as in life in general, this natural course of things holds true in the merchant acquiring industry. What buyers of merchant processing ISO’s and portfolios perceived to be positive attributes just 6 or 7 years ago, no longer holds true…at least not exactly.
Words That Kill (Deals)
Much of the merchant portfolio and ISO valuation focus is centered on the numbers ‒ revenue and charge volume attrition, revenue concentration, standard industrial classification and merchant category code distribution, and Europay, MasterCard and Visa chip technology conversion percentage. Often overlooked, much to the detriment of sellers, are the contractual terms of the agreements that both merchant level salespeople (MLSs) have with their ISOs and ISOs have with their processors.
Selling Your Merchant Processing Residual: First Right of Refusal
For many merchant level salespeople, selling your merchant processing residual can be an eye-opening experience. You had always heard of it being done, and in most cases, that the transaction itself was relatively simple. For the most part, this is true, at least comparatively speaking as opposed to selling a merchant processing portfolio, or enterprise level payments processing company or payment’s technology company. That being said, there are still many issues that need to be addressed in this type of transaction, and one of the most basic is the nature of the first right of refusal you agreed to in your agent agreement with the merchant processing ISO you write your business with. (Note: this is something you need to be absolutely clear on as its one of the answers to the “First Four” questions I always encourage my buy-side consulting clients to ask.)
- How Integrated POS and Infrastructure Technologies Lift Acquirer Valuations: Connecting the Dots
- ATM Business For Sale, ATM Portfolio For Sale, & ATM Route For Sale: Geography
- “Bankcard ISO For Sale”- What Am I Really Buying?
- Buying A Merchant Processing Portfolio The “Professional Class” Of Buyers
- Buying Merchant Portfolio Residuals: Geography
- Buying Merchant Residuals: Where Do I Find Them?
- Buying Or Selling A Merchant Portfolio: Are Revenues From Merchant Fees And Assessments Valid, And Should They Count Towards The Merchant Portfolio’s Valuation?
- Buying & Selling Merchant Processing Residuals: Assessing the Agent/MLS Risk
- The Counter-Intuitive, Paradoxical Nature of Large Merchant Accounts
- Homework For Sellers In The Payments Space: Have Your Reporting Ready
- “I Want To Buy Merchant Portfolios”
- ISV Valuations: Exposing the Silent Power Play between Integrated Software Vendors and Payments Processors for Ownership of the End-User Relationship
- Maximizing Portfolio Value in a Sale: Capitalizing on the Valuation Variance of Downline MLS Portfolios
- Merchant Portfolio Sales: “Staging” the Portfolio
- Merchant Portfolio Sales & Valuation: The Four Faces of Attrition
- Merchant Portfolio Valuation: It’s not just about the multiple!
- Merchant Portfolio Valuation: Large Merchants
- Merchant Portfolio Valuation: Understanding Discounted Cash Flow Analysis (Part I)
- Merchant Portfolio Valuation: Understanding Discounted Cash Flow Analysis (Part II)
- Merchant Portfolios & Merchant Residuals Sourcing Deal Flow
- Merchant Processing ISO Sales: Why an Asset Purchase is the Preferred Deal Structure
- Merchant Residual & Merchant Portfolio Sales: Due Diligence FYI’s For Sellers
- My ISO Just Sold My Merchant Accounts???
- The Next Tech Disruptor in SME Optimization and Operability
- Payment Consultant’s Guide to a Successful Acquisition Strategy
- Selling A Merchant Portfolio: Is There A “Best” Time Of The Year To Sell?
- Selling Your Merchant Portfolio: Beyond The Numbers
- Selling Your Merchant Portfolio: Finding A Buyer That’s Right For You
- Selling Your Merchant Portfolio Or ISO What’s My Attrition?
- Selling Your Merchant Portfolio: Why And When Do Processors Buy Back
- Selling Your Merchant Processing Portfolio, Residual, Or ISO: Reasons Why The Age Of Your Merchant Accounts Are Important
- Strategic Reasons For Acquiring Merchant Portfolios: Cross Selling
- Targeting retail SMEs can kill your ISO’s value
- The 1st Thing You Need To Know Before Buying Merchant Processing Portfolios
- The Faustian Bargain: If What A Buyer Is Offering You For Your Merchant Portfolio Or Merchant Residual Sounds Too Good To Be True, It Is!
- The Most Valuable Merchant Portfolio
- Why Small Merchant Processing Portfolios & Residuals Trade At Lower Multiples Than Larger Ones (Part II)
- Why Small Merchant Processing Portfolios & Residuals Trade At Lower Multiples Than Larger Ones (Part I)