he merger of EVO Merchant Services and Cynergy Data just wasn't in the cards. The companies announced to ISOs Nov. 1, the day the deal was to close, that it would not go through.

"There is a tremendous level of admiration and respect between the organizations and their owners, which could someday lead to further discussions," EVO executive management said in a statement. "But at this time, it would be mutually beneficial to continue to grow the companies independently of one another."

EVO President and Chief Executive Officer Ray Sidhom and Cynergy CEO Marcelo Paladini, though good friends, stepped back from the deal. "They decided both companies are probably better as stand-alones than together," said Cynergy spokesman Steve Savino. "It's better to take a deep breath now, rather than when it's too late."

'Not closely enough aligned'

"There were many good reasons on paper why the merger made sense," Savino said. But as the management teams got into the details of merging the two firms, "they concluded that each company's longer-term goals weren't closely enough aligned to assure success of the merger," he added.

Without having the same goals, ISO partners would not reap enough benefits from combining the companies, Savino said.

Together the companies would have served 160,000 merchants and processed $16 billion in bankcard volume, according to Sidhom. EVO has over 100,000 merchants, making it the 18th largest merchant acquirer in the United States, Savino said.

The decision to cancel the merger had nothing to do with financing, which was already in place, Savino said.

Cynergy co-founder John Martillo was not to have had a role in the merged company. "In a day-to-day sense, Marcelo Paladini is running the organization as CEO," Savino said. Martillo remains part owner of Cynergy. "I believe John Martillo made a conscious decision to back away from day-to-day operations," which gave Paladini the opportunity to investigate other ownership options, leading to merger talks, he added.

Corporate courtship

Mary Winningham, Senior Vice President for VanBrackle Consulting Services Inc., said at a Field Guide for ISOs seminar Oct. 18, "EVO was looking for new technology in Vimas [Cynergy's platform], and Cynergy's management team wanted a liquidity event" and the ability to continue working in the company.

This particular merger would have been comparable to a marriage, with the CEOs having a vested interest and taking great pride in the business, Winningham said in an interview with The Green Sheet. In all mergers, "everyone comes to the table with specific expectations." As teams drill down into the nitty-gritty of merger details, they come across issues that had not yet been discussed. Partners can begin to realize some of their expectations were not valid, she added.

Merging ISOs is no more problematic than creating successful mergers in any other industry, Winningham said. "The industry is accustomed to merging platforms." A merger's success comes down to company cultures. If strong cultural differences are found, "the deal's not going to work for either party," she said.