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Education

The buyer might be ignorant of the guarantee and in for a
rude surprise when the creditor on that loan calls on the
guarantee. This is the main reason ISOs are rarely sold in
the form of a share sale transaction.

If you are contemplating a share sale transaction, review
the ISO agreements of the company being sold. Most ISO
Legal ease: agreements do not prohibit or require a consent for a
change of control—that is, a share sale—but some do. A
review of all of the ISO's commercial agreements would be
necessary to check for change of control consents.

Also, even if the ISO agreement doesn't expressly require
consent for a change of control, the company being sold
may have a Visa or Mastercard registration as an ISO
through a sponsoring bank. The sponsoring bank may
wish to underwrite the new shareholder to maintain the
50 ways to registration.
Sale of ISO assets
sell your ISO The most common way to sell an ISO is to sell its assets.

With respect to ISO agreements, this would mean an
By Adam Atlas assignment of the agreement from the selling entity to the
Attorney at Law buying entity, a process that usually requires consent of
the processor. Agent agreements and referral agreements
of the ISO are also often assigned to the buyer.
n his classic song, Paul Simon says, "There must be
50 days to leave your lover." There aren't quite 50
ways to sell your ISO, but this article describes all Buyers love buying assets because it allows them to cherry-
I the ways I have run across over the years. pick. A buyer might like one ISO agreement for the seller
but not another; they might like some agents but not all
Every sale transaction has its own logic and usually the agents. The purchase of assets also allows the buyer
makes sense for those carrying it out. But it's important to to mostly avoid risks associated with buying a company—
such as undisclosed liabilities.
consider the implications of how an ISO is sold, as it will
have an impact on sale price, tax, post-closing liabilities Sellers may prefer an asset transaction because they might
and many more variables.
want to keep some ISO agreements or some agents and
Sale of ISO shares carry on the business apart from the assets sold.

This form of sale consists of the shareholder of the ISO Sale of ISO agreement alone
corporate entity selling their shares or member interests Some buyers want just a single ISO agreement. Any
in the corporate entity that is party to the ISO agreement.
This amounts to a change of control of the ISO but not an number of reasons can lead to this preference, such as
pricing or filling in a piece of the buyer's platform pallet.
assignment of the ISO agreements to which the ISO is a
party. This kind of transaction is a simplified asset purchase
involving just one asset: the rights (and obligations) of the
selling ISO under the ISO agreement.
For the seller, this is a convenient way to exit the business
entirely and allow someone else to take the whole of the
operating business together with its assets (for example, Virtually all ISO agreements would require consent of
the processor to assign the ISO agreement from seller to
ISO agreements) and liabilities (for example, agent
agreements, referral agreements and loans). buyer. Many of those clauses require that such consent
should not be unreasonably withheld. Some (even large)
processors take enormous liberty with the withholding
For the buyer, purchasing the shares of an existing of consent, sometimes taking eons to provide it and
company carries significant risk because the company
may have liabilities to third parties that are not disclosed sometimes imposing unjustified fees—meaning fees that
do not form part of the agreement signed by the seller.
at the time of sale. For instance, if the seller is dishonest
and had their company guarantee a loan on their home or In this kind of transaction buyers have to consider whether
boat some years in the past.
they can fulfill the obligations under the ISO agreement
being purchased. There may be minimums or other
commitments the buyer would inherit.
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