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May 12, 2014 • Issue 14:05:01
Will easy money flow to

acquirers and ISOs?

Adam Atlas, a Toronto-based attorney who often advises
ISOs selling portfolios, agrees. "Outside investors have
spotted our industry, and they've come to realize they
can earn good money," he said. And that compares well
to investments in newbie payment companies, like Square
Inc. "that are fetching a lot of investor dollars without any
promise of revenues," Atlas added.

Square, which has been challenging the traditional
merchant acquiring model with a device that lets anyone
with a smartphone accept credit and debit cards, reportedly
has been hemorrhaging red ink, and has been forced to
postpone a long rumored initial public offering. In an
April 24, 2014, article citing anonymous sources the Wall
Street Journal reported that Square posted a $100 million
deficit for 2013, and that the company had blown through
better than half of the $340 million in venture capital it has
raised over the last five years. Analysts have said Square
would be hard-pressed to secure anything approaching
that amount of money in an IPO.

"I see this as a vindication for ISOs who have been scared
By Patti Murphy about the potential of companies like these," Atlas said.
ProScribes Inc. He added that he's dealt with investors who were keen on
alternative payment companies now looking to invest in
nvestors flush with cash and buoyed by a low-inter- more mainstream companies. "Traditional providers like
est rate environment are enamored of payments ISOs have proven track records in terms of revenues and
companies, especially companies in the transaction cogent business plans for growth," Atlas said. "That can't
I processing loop. And for good reason. Payments are be said for these new models."
crucial to commerce (regardless of whether the economy
is booming or lackluster). Also, consumers and businesses Harold Montgomery agrees. Montgomery is Chairman
are growing ever more comfortable with electronic pay- and Chief Executive Officer of Calpian Inc., a Dallas firm
ment networks, which as the financials of large payments
companies indicate, can generate significant revenue for
network operators and their partners. Contributed articles inside by:

"It's an easy money period, which makes it a pretty
attractive environment," said Marc Abbey, Partner at First Tom Waters and Ben Abel................................................................. 46
Annapolis Consulting, a Maryland company that advises Jeff Fortney .......................................................................................... 48
parties to mergers and acquisitions involving payment Jake Young ........................................................................................... 50
firms. Abbey added that many new investors are being
drawn on the market by the accomplishments of earlier TOC on page 3
investors.

Continued on page 43