“I Want To Buy Merchant Portfolios”
Of course you do, but do you know how? Here’s a few things to think about before you look to acquire a merchant portfolio:
1) Know what you’re actually looking to buy. SERIOUSLY! Too many would be buyers don’t know the difference between a merchant portfolio and the residual stream of a merchant portfolio. Make sure you understand the difference between them.
2) You need to have a strategy in place to source these types of acquisitions. There are firms that specialize in this.
3) You need to understand the due diligence process, in terms of information and data needed, as well as the expected time frames in which a seller will expect you to have completed your analysis.
4) You must be capable of analyzing the merchant portfolio property. If you have never made an acquisition of this nature before, be sure to educate yourself on the attributes of the merchant portfolio that you need to evaluate, the analyses used in making that evaluation, and understanding the results of those analyses so you can recognize what’s good, what’s bad, and ultimately be able to incorporate that information into a financial model to determine value.
5) Get yourself an industry specific attorney on retainer to assist you with the contract analysis component of the due diligence process, as well as be able to help you formulate your Letter of Intent (LOI) for the seller, and ultimately, the asset purchase agreement. Some free advice: DO NOT USE A GENERAL PRACTICE ATTORNEY FOR MERCHANT PORTFOLIO OR MERCHANT RESIDUAL ACQUISITIONS.
6) Make sure your funding is in place. Be advised that you will be competing with experienced acquirers who are well funded and can move very quickly from the time they get their due diligence materials to closing. If you can’t match their capabilities, you’re automatically at a competitive disadvantage.