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FinTech

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. Read more...

Market Killers – The Top 5 Reasons Buyers Won’t Acquire Your ISO

I often write about the attributes of merchant acquiring platforms that create long term value and whet the appetite of companies who seek to acquire the same, but what about looking at your business the other way – what about looking at the attributes of your company that are abject turn-offs to the marketplace, to the point where buyers won’t even consider acquiring you? One could argue this exercise is simply a different pathway to the same information/conclusions, however, I would argue that it’s not. What I’m providing here are single factors – sole attributes – of merchant acquirers’ businesses that can (and do) cause buyers to walk away at first blush. These five reasons that buyers won’t acquire your ISO are true market killers. Read more...

Maximizing Portfolio Value in a Sale: Capitalizing on the Valuation Variance of Downline MLS Portfolios

M&A activity in payments is prodigious, and maximizing portfolio value in a sale has never been more important. Though the heavy level of deal activity in the marketplace is a fairly current phenomenon ( the past 18 months or so), there’s nothing particularly new about trying to maximize the value of the businesses and/or assets we own when we attempt to sell them. In the merchant acquiring space, saleable properties are unique, and their worth is ultimately valued on the basis of “primary attributes” tied directly to the performance of the underlying payments processing portfolio: attrition, revenue concentration, and SIC/MCC distribution for starters. However, in such an active market, where demand is so high, new buyers emerge, and by virtue of their expansion of the marketplace, these new buyers bring new deal structures and the concomitant broadening of those primary attributes which drive portfolio and ISO valuations. Read more...

High Stakes for Agents in 2017: Re-evaluating the Agent vs ISO Question

As the acquiring industry continues to rapidly reinvent itself, birthing a variety of new, technology-centric business models to better service the demands of the modern day merchant, many long time merchant level salespersons (“MLS’s”) and agents are faced with the increased pressure of having to decide how best to position their companies for a successful future. The sheer velocity of this “reinvention” of the acquiring industry has forced many agents to re-evaluate the upside of continuing their agent status versus registering directly with MasterCard and VISA and becoming an ISO. As a “successful future” for a business is oft measured by sustainability, growth, and value creation, 2017 will be a determinative year for many agents who will be forced to reconcile themselves to one or the other of these two pathways forward. Read more...

Payments M&A: Acquiring the Right Financial Technology

Full version of article originally published in The Green Sheet, 8.9.2016 Edition. Written by Adam T. Hark The future of payments processing is certain. Unless your notion of viability contemplates the continuity of a provincial, mom-and-pop, payments processing company, you are now an official member of the “new order” of merchant acquiring: providing merchants with end-to-end business management solutions or point of sale that also happens to integrate payments. As such, you’re now faced with the challenge of identifying which payments or financial technologies to “hitch your wagon” to. Allow me to share some insight into the rationale that drives this strategic decision and better positions your company for a prosperous future. Read more...

MRI for Your Business? – What a Sell-side Process Can Tell You About Your Company

Original Article Posted to LinkedIn, Authored 7.28.2016 by Adam T. Hark, Managing Director, Preston Todd Advisors Committing yourself, your company, and your employees to a sell-side process can be stressful, distracting, frustrating, and ultimately disappointing if the desired outcome is not achieved – that your company is sold on agreeable business terms. Most owner/operators with quality properties – companies with healthy balance sheets, good EBITDA margins, consistent YOY, double digit top line growth, and interesting, proprietary products and services, especially by way of technologies, find themselves in the advantageous position of not ever having to actually transact, even if that’s their intended objective. These owner/operators always have the option not to sell and pull their property off the market. Thus, for many sellers of quality businesses, the outcome of a formal sell-side process isn’t always an actual sale. Read more...

How Integrated POS and Infrastructure Technologies Lift Merchant Acquirer Valuations: Connecting the Dots

Full version of article originally published in The Green Sheet, 6.27.2016 Edition. Written by Adam T. Hark Theory has met reality in the merchant acquiring world. It’s no longer just an idea that there’s a ubiquitous convergence of technology and payments processing underway — it’s a fact. Before a merchant acquirer surrenders to this reality, however, and starts investigating which technologies may be worthwhile embracing, whether through acquisition, partnership, or development, it surely makes sense that an acquirer’s first inquiry should be, “what do these new technologies actually do for my platform?” The answer to this question, together with understanding the added value contribution, will pull back the curtain on how these technologies work to lift merchant acquirer valuations. Read more...

I don’t think so => “VARs and traditional integrated payments software model heading for the graveyard”

Authored 6.6.2016 by Adam T. Hark, Managing Director, Preston Todd Advisors “Will PayFacs Kill the VAR Model”, by PMNTS makes an interesting argument, but I don’t buy it. The PayFacs model has been around for a long time. Though not always marketed as “PayFacs”, the master merchant account configuration with subordinate processing accounts isn’t new to the acquiring industry. Here are my top 5 reasons why this article’s prediction won’t come true…at least not any time soon. Read more...