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This article appears in the April 23, 2009, edition of ISO&Agent Weekly.
Century Payments Inc. bought National Merchant Solutions, a Birmingham, Ala.-based ISO for an undisclosed sum, marking Century's fourth acquisition since January.
Century started in January backed by $50 million from Austin Ventures, an Austin, Texas-based venture capital firm.
Dallas-based Century's latest acquisition expands the company's presence in the Southeast, Robert Wechsler, Century president and CEO, tells ISO&Agent Weekly.
The deal is part of Century's plan to build a national processing company among small and medium-sized merchants.
Century liked National Merchant Solutions because the sales staff is "highly productive" and its leadership has similar goals for growth, Wechsler says. Though he declined to say how many merchants Century has as customers, Wechsler says the firm has more than 200 salespeople nationwide, adding that recruiting sales agents has not proved taxing.
Wechsler says the firm directly employs the majority of Century's sale staff, but he wants to expand the number of independent agents.
Wechsler says Century is set to launch a new brand this week called Reliable Payments that could help attract more sales agents and merchants. Century is positioning the new brand as an "elite" group of the top 100 sales agents, he says.
Search For Acquisitions
Michael Rovner, an Austin Ventures partner, says his firm, with Wechsler's guidance, continues to look for companies to buy. "The list of folks we're talking to today is quite long," Rovner tells ISO&Agent Weekly.
The rate of acquisitions will not necessarily mirror the pace of acquisitions seen so far this year, Rovner cautioned.
Likely candidates include those merchant portfolios that show good revenue growth but have cash flows that may be too tight for the current portfolio owners, Rovner says.
"We're able to come in and not only provide a platform and strategic expertise but some capital to really fuel growth," Rovner says. He does not foresee a change in Century's strategy.
"As long as we see market conditions like this we will continue our strategy," he says.
Acquisitions, Financing Challenging
Austin Ventures also invested in Way Systems Inc., a wireless point-of-sale terminal maker based in Woburn, Mass., and PreCash Inc., a Houston-based stored-value card company.
Austin Ventures may be fortunate in its ability to make acquisitions because such deals "continue to be challenging" for most of the ISO industry, says Steven Davis, senior vice president at Comerica Bank in Detroit.
"Financing will likely only be there for the highest quality deals," Davis tells ISO&Agent Weekly.
Several factors account for this.
"There are a number of reasons for this, including the overall instability in the economy, the need for banks to focus on cleaning up their balance sheets, and the generally lower multiples that banks are willing to lend in merger and acquisition deals," Davis says.
Davis suggests that the industry will see fewer deals in the next six months than it did a year or two ago.
"However, we are looking at several opportunities currently and expect to book a majority of them," he says.
