Portfolio Valuation & Sales
The underlying value of your payments business is the portfolio of your merchants. The Value of your portfolio is determined by evaluating:
- The total monthly revenue the portfolio yields.
- The make up of the portfolio including number of merchants, types of merchants, terms and age of the merchants' contracts.
- Portability and ease of conversion of the merchants.
- Contractual terms between you and the acquirer or its ISO/MSP.
The portfolio needs to be reviewed from the perspective of a potential buyer. Is the make up of the portfolio weighted by a few major merchants producing the majority of the profitability? If so how stable and secure are the contracts and relationships with those merchants? Where did the portfolio come from? Is it made up from direct sales or from agents? How would a sale be perceived by the agents? Would the agents be retained and included or might the agents despite contractual obligations attempt to move the merchants? Over all how long are the merchants contractually obligated to process? What is the attrition rate of the portfolio? What is the growth rate of the portfolio both in quantity of merchants and processing volume and revenue? Are there any regulatory or compliance issues associated with the portfolio that might impact it in the future? Are the merchants pretty securely associated with you because you provide a unique technology solution? A thorough evaluation of these and other considerations will help you understand what your portfolio is worth.
You should also on a regular basis examine your portfolio so you understand the metrics of your business. One needs to look at losses, attrition and profitability.
Should you decide to sell, consider:
- The proper value.
- The proper buyer.
- The best broker if used and commission to the broker.
- The terms and structure of the deal.
Mark Gorge & Associates have the experience to help you evaluate what you have. We can assist you in benchmarking your portfolio and improving it. We have qualified buyers always wanting to purchase portfolios. Always check with us to make sure you understand your options and have the best deal possible.