Phoenix-based POST Integrations, which provides credit card processing services for hotels across the nation, has hired Citadel as its financial adviser. POST has about $20 million of EBITDA and is seeking bids of 12x, according to three people with knowledge of the situation.
Mary Gerdts founded POST in 1991 and is currently the company’s CEO and president. POST’s customers include Hilton Hotels and Interstate Hotels.
POST’s business is very relationship-driven and built around Gerdts, says one banker. “If Mary goes away, does the business go with her?”
The company’s high valuation is also drawing ridicule. “Nothing is trading at 12x EBITDA,” the same banker says. “It’s a ridiculous expectation.”
POST Integrations isn’t alone in its lofty ambitions. Merchant e-Solutions, which is backed by Trident Capital, is also up for sale. The Redwood City, Calif.-based payment processor has roughly $40 to $45 million EBITDA and is seeking bids of 15X, sources have told peHUB.
PE firms, which have been very active in the payment processing sector, are expected to be interested in POST. GTCR Golder Rauner agreed in September to sell National Processing Co. to Fifth Third Processing Solutions (NPC sold for a more reasonable 7x EBITDA, I’m told). Advent and Bain Capital are currently buying RBS Worldpay, the leading merchant acquirer in the United Kingdom. Welsh Carson also owns TransFirst.
The POST auction is the latest to be handled by Citadel, the Chicago hedge fund that is building up an investment banking practice. Citadel also handled the sale of First American Payment, a payment processor owned by Lindsay Goldberg, that was up for sale recently. First American has about $50 million EBITDA and was seeking bids of 12x, sources have told peHUB. In the past month, roughly a dozen prospective bidders—including several PE firms—walked away from the auction after conducting due diligence. The First American auction is now considered busted.
UPDATE: POST Integrations CEO Gerdts, in an email to peHUB, denied that the company was on the block. “POST Integrations is not for sale,” Gerdts wrote in the email. “Not only is it not for sale, you have incorrectly stated our finances, which as a private company, are a private matter.”
Citadel couldn’t be reached for comment.