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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...

Payment Consultant’s Guide to a Successful Acquisition Strategy

Full version of article originally published in The Green Sheet, 6.27.2016 Edition. Written by Adam T. Hark My firm receives over a dozen inquiries every month from parties interested in acquiring merchant processing portfolios. I’m amazed by this level of interest. Why? The merchant acquiring industry is evolving at a blistering rate, pivoting away from the traditional model where the core product and service offering is just payments processing, and hurtling towards a model where comprehensive, end-to-end business management solutions, usually offered as SaaS platforms, rule the day. Let me be blunt: the traditional merchant acquiring model has crossed the event-horizon and is well on its way towards non-viability. As such, when parties approach me about acquiring a card processing portfolio, the first question I always ask them is “why?” I ask this because there is nothing more important in designing a successful portfolio acquisition strategy than clearly understanding the client’s objective with the acquisition, and given that the acquiring industry is undergoing convulsionary change, it stands to reason that past drivers for merchant portfolio acquisitions aren’t necessarily what’s guiding the market activity today. So what’s driving the interest in portfolio acquisitions right now? What strategies are being employed? Let’s take a look at three of the most common scenarios in today’s marketplace. 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...

Payment technology companies offer more than EMV upgrades

The following article was originally published in the April 11, 2016 edition of the Green Sheet.

As I sit down to write this, I’m not sure if I’m doing so as a mergers and acquisitions professional in the payments space, or simply a payment professional seeking to impart some insight – and truth – into the payment processing community. Read more...

Targeting retail SMEs can kill your ISO’s value

The following article was originally published in the February 22, 2016 edition of the Green Sheet.

The thrill of signing a new account never gets old. The adrenaline rush you experience when closing a deal is real and, arguably, well deserved. From a merchant level salesperson (MLS), perspective, life is good. A new deal translates into more revenue, padding a residual stream that you may or may not sell one day. Read more...

Words that kill (deals)

The following article was written by Adam Hark, Managing Director of MerchantPortfolios.com, and originally published in the November 9th edition of the Green Sheet.

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. Read more...

The counter-intuitive, paradoxical nature of large merchant accounts

The following article was written by Adam Hark, Managing Director of MerchantPortfolios.com, and originally published in the November 9th edition of the Green Sheet.

It’s easy to imagine the exultation of an ISO owner or merchant level salesperson (MLS) upon the successful addition of a large merchant account to his or her portfolio. Whether that large merchant is card-present retail or card-not-present, represents a single store or a chain of hundreds of locations, the elation one must feel having successfully sold that merchant must be wonderful. And let’s not forget why. Large merchants can be responsible for substantial increases in residual income to an ISO’s or MLS’s portfolio, and after all, isn’t that the point? Read more...

The most valuable merchant portfolio

The following article was written by Adam Hark, Managing Director of MerchantPortfolios.com, and printed in the August 10th edition of The Green Sheet.

What a useful academic exercise it would be to cobble together the perfect portfolio: the one to which all other merchant portfolios aspire. A variation of this exercise is commonly performed through “benchmarking,” an analysis of a subject merchant portfolio as compared with a premium book which is known to have carried a top valuation in the marketplace. Benchmarking is a highly effective tool for owners interested in maximizing the value of their merchant portfolios. It can show them where their portfolios are strongest and where they need improvement, as related to valuation. Read more...