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Merchant acquirer TransFirst Inc. has a new owner. Private-equity firm Vista Equity Partners, San Francisco, is buying Hauppauge, N.Y.-based TransFirst for an undisclosed amount, TransFirst announced Monday.
This summer, TransFirst, which has more than 200,000 merchants, had planned a partial initial public offering with its current owner, Welsh, Carson, Anderson & Stowe, a New York City-based private-equity firm that bought TransFirst in 2007, continuing to own a majority of TransFirst’s voting shares after the IPO.
The IPO is on hold, says John Shlonsky, TransFirst president and chief executive. As recently as Sept. 19, TransFirst filed an amended S-1/A, a registration document required by the Securities and Exchange Commission. In that document, TransFirst said it had $1.1 billion in revenue for the 12 months ended June 30, and net income of $20.1 million.TransFirst says it works with more 1,300 partners to sell its merchant-processing services.
TransFirst intends to embark on an expansion following the close of the deal, which is expected by year end, the company says. While praising Welsh, Carson, Anderson & Stowe’s oversight of the acquirer, Shlonsky says the acquirer is preparing for more growth with this deal.
TransFirst will look to new verticals for expansion, where it can grow its integrated software business, Shlonsky tells Digital Transactions News. “As we start thinking about integrated solutions, our business is shifting to an integrated model,” Shlonsky says. Vista, through its other investments in software development companies, is in tune with what software providers look for, he says. “This is a great fit us to collaborate with Vista and expand,” Shlonsky says. “The attrition is low and the margins are still good.”
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Merchant acquirers like TransFirst remain a valuable investment for private-equity firms, says consultant Eric Grover, principal of Minden, Nev.-based Intrepid Ventures.
“While it’s relatively mature and fiercely competitive, acquiring in the United States is still very profitable and a growth market,” Grover says in an email. “Notwithstanding all the speculation about acquirers being disintermediated by payments innovators, it’s not going away. And there’s plenty of room for enhancing acquiring businesses through innovative origination partnerships and integration (Mercury, Intuit, etc.) and bundling additional services with payments (Clover, Leaf, Go Pago, et al).”
Mercury Payment Systems and Intuit rely on connecting payments with business-management software by working with independent software developers, or, as with Intuit, its own software. Tablet-based point-of-sale system makers like Clover Network Inc., Leaf Holdings Inc. and GoPago-maker DoubleBeam Inc. include other services, such as loyalty and rewards, in addition to payment acceptance.
“Moreover, the payments industry is global and most U.S. players of any size have and are pursuing expansion in higher growth and less competitive markets abroad,” Grover says. “TransFirst is large enough that it should be thinking about seeking growth overseas. Over the last couple years EVO Payments International picked up three European acquirers.”
