Merchant Portfolios assists clients with conducting financial analysis and compiling comprehensive projections of their business and portfolio performance. Our forecasting models and analytical capabilities help clients better understand the specific metrics that drive growth. Working within the scope of bespoke engagements, our analysts can set targets for future KPIs that align with strategy and facilitate better decision making. 

Our services can also help payments professionals identify which attributes of their merchant portfolio require remediation, and whether their strategic investment decisions or future acquisitions will generate the desired rate of return. 

Budgeting has become ever more important as the merchant acquiring industry begins to deploy generative AI and process automation solutions. Understanding which solutions solve for which problems, then identifying the right provider to replace or enhance human processes can greatly reduce costs and boost margins. Budgeting, therefore, today has much greater variability and founders must be mindful, especially if positioning to exit or acquire.

Our services include:

• Segmented Portfolio Attrition Analysis
• Income Statement, Balance Sheet and Cash Flow Projections
• Capital Budgeting and Investment Decision Support
• Generative AI and Process Automation Advisory

Residual Revenue Forecasting:

One of Merchant Portfolios’ most valuable offerings to payments companies is its ability to accurately forecast merchant portfolio residual income. We do this through a multitude of KPI analyses including the assessment of merchant churn, new merchant boards, average payment processing volume, and take rates, to clearly illustrate a 5-year forecast with a high degree of confidence. This portfolio residual forecasting is fundamental to transactional (M&A) situations, offering insights into residual or portfolio valuation (merchant portfolio multiple) in both sell-side and buy-side deals.

Additionally, in a financing scenario, when a merchant portfolio residual stream is used to raise debt or equity, both buyers and sellers alike will appreciate MP’s ability to customize the revenue assumptions so that they can evaluate critical return metrics like IRR, MOIC, and acquisition payback. This provides concrete data to help MP clients determine if an acquisition is worthwhile or not, or how a buyer would evaluate such a purchase.

There are other merchant portfolio residual forecasting applications help clients evaluate the true costs and benefits of corporate scenarios, including:

• Debt Financing:
  • Evaluating if portfolio residuals, EBITDA, or true cash flow can support debt payments
• Equity Financing:
  • Modeling out cost of goods sold and operating costs needed to scale and hire, giving clients the ideal financing amount needed to sustain the business
  • Forecasting new revenue streams and evaluating their profitability, effectively quantifying new opportunities to investors
• Agent Buyouts:
  • Quantify the cost savings and margin increases when an ISO buys out its 1099 agent base, partially or en masse. This tells the ISO how much of a buyout they can afford, taking into account financing costs
• Sales Team Analysis:
  • MP can take a portfolio residual set and analyze it by sales groups and MCC codes, illustrating key merchant portfolio KPIs and insights that drive sales growth or attrition