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.
Maximizing Portfolio Value in a Sale: Capitalizing on the Valuation Variance of Downline MLS Portfolios
I recently had the opportunity to attend a Business Solutions Magazine sponsored conference for ISVs, VARs, and MSPs. Though not an owner/operator of the aforementioned business types, I do have a keen interest in the “goings on” of these businesses. I am a consultant and strategic advisor to payments and payments technology companies, and have been on a self-imposed mission to better understand the ISV, VAR, and MSP points of view on payments. Collectively, these business types have become the new darlings of the payments processing industry in its insatiable thirst to sustain growth (and arguably viability) through the value added products, services, and distribution, which ISVs, VARs, and MSPs bring to bear. Read more...