In the world of integrated payments and SaaS, acquirers abound and high-quality assets are hard to find. And as we head into 2019, all signs point to the continuation of a robust sellers’ market.
For the fortunate owners of top caliber properties, the market has become a name your price, name your terms, and prepare the family for the new condo in Palm Beach proposition. It’s really simple: you’ve built a successful business, and that in turn has earned you an unsolicited offer from a Buyer who is going to pay you top dollar, and close your deal in 45 days or less.
You’re a new boxer/fighter. You started training one year ago. Now, imagine entering the ring for your first true bout. Your opponent is equally matched in height, weight, speed and reach. It appears to be an even match – even to the casual observer. You feel good about your chances as you size up your opponent. You got this - there’s nothing you see that gives your opponent an advantage over you.
I’ve Secured Growth Capital for My Payments Company – How Do I Optimize Investment 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”).
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.
Independent software vendors have seen the light with regard to recognizing and appreciating the value of payments processing. Once an overlooked service offering and revenue stream, payments processing has risen to celebritydom in the software community as a way to flesh out an ISV’s existing value proposition to its end-users, and as a long term strategic play for enterprise value creation through the high quality, recurring revenue that it brings to bear.
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.
Exposing the Power Play between Integrated Software Vendors and Payments Processors for Ownership of the End-user Relationship
Valuations for ISV platforms with payments integration, and payments processing companies which have vertically integrated high margin, high growth software platforms with measurable EBITDA contribution, are on the rise. The level of M&A activity for both is striking. But beneath this synergistic rapture and its intoxicating boon to valuations lies a fascinating phenomenon which bespeaks a calculating power play between ISVs and payments processors for the keystone to their shared windfall: the end-user relationship.