Is Technology Part of Your Merchant Portfolio Sale?

Selling technology services that are integrated with payment processing is a sure-fire way to drive up portfolio value. Here’s why: a merchant with a standalone POS terminal can decide to switch processors with little compunction. But if that POS device integrates with technologies that help businesses better manage operating tasks – like inventory tracking and customer loyalty programs – the business owner cannot be easily swayed, say by the promise of lower transaction fees.

If a large percentage of a portfolio relies on integrated technology, and attrition is low (10% or less), a seller is well positioned to negotiate a high multiple when selling their portfolio. That’s because buyers understand that these merchants will keep processing for years to come.

There are some things to watch out for, however, when selecting a technology partner.

First, and foremost, make sure you have an iron-clad agreement with your technology partner that precludes them from poaching merchants. And spend the money needed to have an attorney review the agreement to ensure it’s in your best interests.

Of equal importance is selecting a technology partner that’s financially sound. Take the time needed to perform a thorough due diligence.

To maximize the value of a merchant residual portfolio you need to be selling a solution that is fully and exclusively integrated with your ISO. Provided the ISO is a large, well-established company, and the integrated software vendor (ISV) has the best technology available for ensuring the best customer experiences, you’ll be golden.

Do you have a merchant residual portfolio with technology integration? Are you looking to sell your merchant residual portfolio?

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