Merchant e-Solutions is drawing interest from strategics including Global Payments and Intuit, two sources say, although a third source, a banker, says “Global Payment is unlikely to buy Merchant e-Solutions given the high price.” Cielo, the Brazilian payment processor, is also believed to be looking at Merchant e-Solutions, a different person says.
It’s not clear whether PE is still involved in the auction. One source says that buyout shops opted out of the auction due to Merchant e-Solutions’s high price tag. In October, I reported that the payment processor, which is backed by Trident Capital, was seeking bids of 15X, which is considered to be very rich. Merchant e-Solutions produces roughly $40 to $45 million EBITDA. JP Morgan and Bank of America are advising on the sale.
In 2000, former execs of BA Merchant Services, a unit of Bank of America, founded Merchant e-Solutions. Sharif Bayyari, Merchant e-Solutions current president, CEO and Chairman, was president and CEO of BA Merchant Services. Jim Aviles, current COO of Merchant e-Solutions, was a senior VP at BA Merchant Services.
Bayyari owns a majority of Merchant e-Solutions. “Sharif always had very outrageous price expectations,” the banker says. “I don’t think the growth rate supports what he’s asking.”
High price expectations have scuttled other fintech deals this year. In the fall, Lindsay Goldberg pulled the sale of First American Payment Systems, an electronic payment processor, after seeking bids of 12x EBITDA. The high price—deemed unrealistic by many—caused several buyout shops to walk away from the auction after conducting due diligence. Lindsay Goldberg ended up recapping First American and taking a roughly $135 million dividend from the company.
Officials for Merchant e-Solutions, Cielo and Global Payments couldn’t be reached for comment. Intuit declined comment.