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A recession-like economy increases the risk to independent sales organizations lacking money and a sound business plan, and it could make them good candidates for acquisition, Marcelo Paladini, CEO of Cynergy Data LLC, a New York-based ISO, tells CardLine. Decreases in consumer spending, especially in the fourth-quarter holiday season, translate into less monthly and annual revenue for ISOs, he says. "That means to start running healthy, companies [must] watch their expenses and overhead," Paladini says. For ISOs, that means eliminating unnecessary steps in such areas as the sales and merchant-application processes and in the transaction process itself. The risk for smaller ISOs, which may lack large cash flows, cash reserves or the corporate structures to easily adapt, is they may be easy acquisition targets, Paladini says. "That already is happening," he says. "It will continue to happen." The conflict for the smaller ISOs is that their executives may not want to discard their business plans. "But they may need a partner just to survive," Paladini says.
