IPayment Inc is up for sale again, but the company shouldn’t expect too much interest from private equity, according to banking sources.
Bloomberg News reported November 30 that iPayment is exploring options, including a sale. The payments processor is working with JP Morgan Chase & Co on a strategic review, the story said.
A sale could value iPayment at $1 billion, Bloomberg said. That’s about 10x to 11x the company’s roughly $90 million EBITDA, one banking source said, calling it a “high number.”
A second banking source predicted iPayment wouldn’t fetch more than “7x tops.”
“It’s not worth the leverage multiple,” a third banker added.
Private equity firms including Comvest Partners, GTCR, Madison Dearborn Partners, Parthenon Capital Partners, Vista Equity Partners and Warburg Pincus have invested in the merchant services space. PE firms are expected to “take a look” at iPayment, but it’s unlikely they will bid, sources said.
New York-based iPayment provides credit card processing services to about 153,000 merchants across the United States, according to its website. The company produced $178.6 million in revenue for the quarter ended September 30, an SEC filing said.
IPayment has been up for sale several times before, bankers said. The last time occurred in 2010 when iPayment hired Perella Weinberg to find a buyer, Buyouts reported. Unrealistic price expectations contributed to the failed auction, the sources said. IPayment’s EBITDA was higher at the time, around $100 million, and it was looking to sell for 9x to 10x.
The current iPayment auction comes in the midst of a surging M&A market. Bankers at the Buyouts Texas conference noted that bidders are paying high prices for somewhat questionable deals. “M&A is really hot right now,” the first banking source said. “Maybe it’s hot enough that [iPayment] can do it.”
TransFirst Holdings Corp, which also has been up for sale several times, is currently running a dual process, Buyouts reported. TransFirst is currently backed by Vista Equity, which acquired the payments process in October 2014.
TransFirst filed to raise $100 million in an IPO on October 16, but it is also looking for a buyer, sources told Buyouts.
IPayment and JP Morgan could not immediately be reached for comment.
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