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There's no way to escape industry type's importance right All of this is to say that what goes around, comes around.
now as ISO valuations work to anticipate future growth. While demand is highest for geographic segments
and industries that have already rebounded, merchant
Same-store sales growth portfolio owners must be cautious of selling at the bottom
The only thing an investor loves more than a target with or allowing investors to sneak across discounted multiples.
double-digit growth is finding a target that is about to
experience double-digit growth unbeknownst to its own As you can see, the extraordinary consequences of the
management team. In these cases, professional investors pandemic have changed the historical valuation paradigm
spend a lot of time talking down a businesses' recent for merchant acquirers, ISOs and payments processors.
performance in hopes of negotiating a better multiple for The good news is that there are definitive signs of greater
themselves. market liquidity, which in turn is driving increased M&A
activity.
However, before allowing an investor to peg a multiple to
a portfolio's performance over the past year, it's important Because of this, merchant acquirers need to get back to
to consider the portfolio's performance pre-pandemic. As anticipating investor interest for their companies. Better
counter-intuitive as it may seem, if a portfolio's merchants yet, ISO owners ought to avail themselves of the valuation
are near a historic low in processing volume but anticipate insights discussed above. When owners understand
a rebound in the near term, the portfolio should command what's driving valuation, they put themselves on better
a higher multiple. The reason being, the investor has footing to negotiate with interested investors and are able
already benefited from applying a multiple to a lower (and to better defend the value of the companies they have built
growing) residual base. and kept alive through the past year of challenges.

Valuations by nature are always forward looking, so Anthony Malatesta is director at Wellesly Hills Financial, covering the
valuations today must consider how the merchant acquirer payments processing and financial technology sectors. He also man-
will grow into its multiple as businesses reopen over the ages MerchantPortfolios.com, providing consulting services to ISO/MSP
next several months. owners. He can be reached at a.malatesta@wellesleyhillsfinancial.com.

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