Merchant e-Solutions Is Up for Sale, Seeks Bids of 15X EBITDA

Merchant e-Solutions, a payment processor backed by Trident Capital, is up for sale, banking and PE sources say.

Redwood City, Calif.-based Merchant e-Solutions has hired JP Morgan and BofA Merrill Lynch as its financial advisors. The company processes more than $14 billion in domestic and international payments for more than 65,000 merchants, according to the Merchant e-Solutions web site.

Merchant e-Solutions has roughly $40 to $45 million EBITDA. The company is seeking bids of 15X, sources say.

“They are in the market right now,” says one buyout exec. “They are looking for an aggressive valuation.”

Merchant e-Solutions was founded in early 2000 by former execs of BA Merchant Services, a publicly traded unit of Bank of America. Sharif Bayyari, who is Merchant e-Solutions 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.

Trident Capital, a VC and PE firm, invested in Merchant e-Solutions in 2000. It is not clear how much they provided or how much they currently own. A 2005 Trident newsletter says Merchant e-Solutions, at the time, had raised $27 million in capital.

Trident’s investment in Merchant e-Solutions came from its fourth fund, which raised $350 million in 2000, according to a press release.

W Capital, a direct secondary buyer based in New York, also owns a stake in Merchant e-Solutions. It is not clear when they invested or how much they own. However, W Capital’s stakes range from 5% to 30%, according to its web site.

In 2003, 3i Group also invested in Merchant e-Solutions when it led a $7 million Series C round. 3i has apparently sold its stake. Merchant e-Solutions is listed as a former investment on 3i’s web site.

The sale of Merchant e-Solutions is the latest in the processing sector. First American Payment Systems was up for sale recently and was seeking bids of 12x. However, roughly a dozen bidders walked away in the past month after conducting due diligence.

JP Morgan declined comment. Officials for BofA Merrill Lynch, Trident, W Capital and Merchant e-Solutions couldn’t be reached for comment.