Abstract
NEW RESEARCH REPORT BY MERCATOR ADVISORY GROUP
In the third quarter, M&A activity in the payments industry went through a
sudden, if not unexpected, deceleration. ith strains on capital availability
increasing from the still growing sub-prime meltdown and signs of slowing
global economic activity, the friction of sharply more expensive money and an
increasing unwillingness to provide credit appears to have put many deals on
hold or scotched them outright.
While this slowdown in M&A activity was hardly confined to the payment
industry - with over $720 Billion committed through Q3, 2007 is destined to
break all records for global M&A activity, the torrid pace has simply slowed.
Activity did not cease of course. Deals long in the works with commitments in
hand were announced during Q3. Fiserv' s acquisition of CheckFree was a
significant event amid the slowdown.
Consummating large private equity deals did get harder over the quarter.
KKR' s acquisition of First Data proved more challenging to complete. Backers
who had lined up earlier in the year to provide funding looked over at their
subprime-backed portfolios, shuddered and demanded to renegotiate the cost of
their debt offering to KKR.
"While the payments industry remains an attractive area given its
preference for transaction-based revenue and monthly recurring revenue
streams, tighter credit markets have put a break on M&A activity particularly
by small and mid-size firms," comments George Peabody, Director,
Mercator Advisory Group. "Even the largest deals, KKR' s First Data
acquisition among them, took more time and cost more money to complete."
There were 20 M&A transactions and 3 Venture Capital financing deals in the
payments industry during the second quarter of 2007. During Q3, M&A activity
dropped by 37.5%, and VC activity dropped by 50%.
The breakdown of the 23 deals announced in the first quarter is as follows:
- Vendors - 8 deals
- Card Issuers - 7 deals
- Processors and Acquirers - 3 deals
- Remittance Companies and Check Cashers - 2 deals
- Venture Capital investments -3 deals
The Payments Industry M&A Report - Q3 2007 assembles into a single resource a
summary of M&A and VC activity along with information on each of the payments
industry related M&A deals, contact person(s) related to each deal, and an M&A
activity table that summarizes the highlights of the quarter. All activities
are accessible via easy to scan tables listing and summarizing M&A activity.
The entirety of each press release is also included.
This report contains 68 pages, 2 exhibits, and 6 tables.
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