March 4, 2013 PAYMENTS 2013: THE EVOLVING M&A LANDSCAPE

Berkery Noyes just issued a white paper entitled “Payments 2013: The Evolving M&A Landscape.” Payments M&A volume improved 45 percent on a year to-year basis.

Five notable factors in particular are shaping the M&A landscape for payments companies: the proliferation of big data, ongoing adoption of electronic bill presentment & payment (EBPP) solutions, the growing popularity of mobile banking, maintaining data security, and confronting a changing regulatory outlook. Demand in emerging markets and mobile payments technology is also having an impact on growth projections.

Over the past three years, payments transactions valued at greater than $160 million had a median EBITDA multiple of 15.5x, whereas those in the $40 to $160 million range had a median EBITDA multiple of 9.2x. Private equity buyers were responsible for 17% of transaction volume but represented 33% of value between 2010 and 2012.

Monitise plc was the most active payments acquirer tracked by Berkery Noyes during 2012. The UK based mobile payments company purchased Clairmail, Inc. for $174 million, The Mobile Money Network for $24.16 million, and eMerit Solutions Ltd. for $2.40 million.

The top ten acquisitions in 2012 had a combined value of $2.64 billion, which comprised 78% of the industry’s aggregate value. Brazilian payment processor Cielo S.A completed the largest transaction, acquiring Internet based e-commerce company Merchant e-Solutions for $614 million. Deal value decreased 23% throughout the prior twelve months, totaling $3.41 billion for the year. Although there was a $1.02 billion decline in value from 2011 to 2012, 30 additional transactions were completed within the same timeframe. This is a strong indicator that more mid-market deals are occurring.