tsg overview - the strawhecker group documents - t1… · comprehensive data • tsg’s acquiring...

TSG OverviewProducts and ServicesThis report is based upon information we consider reliable, but its accuracy and completeness cannot be guaranteed. Information provided is not all inclusive. All information listed is as available. For internal use only. Reproducing or allowing reproduction or dissemination of any portion of this report externally for any purpose is strictly prohibited and may violate the intellectual property rights of The Strawhecker Group. © Copyright 2019. The Strawhecker Group ®. All Rights Reserved. DISCLAIMER: The Strawhecker Group (TSG) is not endorsed, sponsored by, or in any other way affiliated with the any companies or their logos illustrated in this presentation. The trademarks shown are registered and their own. This document has not been prepared, approved, or licensed by any entity displayed.

“TSG’s expertise provided new insights and education around the merchant acquiring space, while the benchmarks conducted highlighted data sets that no amount of advice would have uncovered.”

Angela Lim, Visa Worldwide

“ “Since joining GEM we have worked closely with TSG to make tangible adjustments. The GEM team has helped us better understand and improve our platforms and integrations.”

Elavon

“

“TSG’s eReport subscription provides timely, credible insights for our team. We always look forward to the next release!”

Ivy Boehm, JPMorgan Chase

“

FOR DISCUSSION PURPOSES ONLY. © COPYRIGHT 2019. THE STRAWHECKER GROUP. ALL RIGHTS RESERVED.

Payments Experts. Powerful Data

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Consulting is needed for a variety of reasons to ultimately improve the business, finances, market share and global presence. TSG’s specializedapproach provides direction, tools, and strategies that empower an organization to successfully achieve a desired future state. TSG helps navigatefrom the start, and benchmarks throughout the process, to achieve cost effective synergies.

Profitability& Financial

(AIM)

Technology& Performance

(GEM)

Buy/Sell&

Valuations

Management Consulting

MarketIntelligence

What is your value?Complete a valuation exercise and position your property to

receive a premium

How much money are you making? Benchmark growth, attrition and financial performance against peers and the overall industry

How is your platform performing?Benchmark your APIs and review transaction performance globally to spot issues and adjust for success

Are you on the right path?TSG helps identify and relieve

paint points to ensure efficiencies are realized

What are your competitors doing?Leverage market and competitive

intelligence to support a wide range of strategic decisions

FOR DISCUSSION PURPOSES ONLY. © COPYRIGHT 2019. THE STRAWHECKER GROUP. ALL RIGHTS RESERVED. 3

Payments Experts

TSG is THE Subject Matter Expert in the Industry

• TSG’s team of over 35 individuals are passionate about Payments and focused on all elements of the industry – from technology, operations, and M&A, to competitive intelligence and analytics

• The team has deep experience in the payments industry with average industry experience surpassing 25 years – most holding C-Level positions

Powerful Data

TSG has unique industry Analytical Platforms to help clients benchmark their performance and focus their strategy

• The AIM Platform has revolutionized the way acquirers manage their business by allowing them to benchmark their growth, attrition and financial performance against their Peers and the overall Industry. Acquirers that manage more than 75% of the Dollar Volume in the U.S. use the AIM toolset

• The GEM Platform is the only gateway measurement tool that measures quality and performance from the merchant's perspective. GEM provides performance analytics to gateways managing more than 66% of the eCommerce traffic in North America

TSG specializes in Payments, and is the largest advisory/analytics firm in the payments acceptance industry. TSG’s uniqueoffering is built on decades of focused expertise and powerful data.

TSG is the largest analytics and consulting firm focused on the payments acceptance industry

FOR DISCUSSION PURPOSES ONLY. © COPYRIGHT 2019. THE STRAWHECKER GROUP. ALL RIGHTS RESERVED. FOR DISCUSSION PURPOSES ONLY. © COPYRIGHT 2019. THE STRAWHECKER GROUP. ALL RIGHTS RESERVED. 5


• Organizational Change Management (OCM)o Change is undertaken for a variety of reasons to ultimately improve the business, finances, market share and global presence. Tracking progress during this time is

critical.

• Contract Renegotiation/RFP Processo Long before a contract expires is the right time to “shop the market”. Going out for a competitive bid through a Request for Proposal (RFP) or Request for Information

(RFI) is the optimum process to bring the best economic results and preferred partner.

• Risk Management & Compliance Serviceso TSG has extensive capabilities to assist our clients to manage portfolio risk and to mitigate potential association compliance issues. TSG is also one of a very select

few of approved vendors for Global Acquirer Risk (GARS) reviews.

• Helping Software Companies Monetize Paymentso Diving into the payments industry can be confusing, from the different kinds of products and services to the fundamental questions of “build, buy, or partner”. The

Strawhecker Group (TSG) works with software companies to help provide clarity and build strategies.

• B2B Paymentso Understanding how to optimize commercial card payments is key to capturing the B2B acquiring market. The ability to reduce B2B suppliers’ collection efforts and

costs associated with card payments will make you and the services you offer invaluable.

• POS Hardware/Software Integrationo TSG can provide detailed information on the top integrators in specific verticals as well as comprehensive comparisons of the leading POS systems in the market

today.


Strategy• Using data and expertise, TSG created a go-to market plan for a non-

U.S. bank to enter the U.S. market

Contract Negotiation • TSG saved a regional bank acquirer over $44M in economies for a new

five-year term

Due Diligence• Using its analytical platforms, TSG created a synthetic portfolio of a

target company, helping investors understand its true benchmark

Recent Pain Points TSG Has Advised on

Putting the customer first, TSG prides itself on understanding a client’s pain points and working together to find theoptimal solution leading to a higher ROI.

B2B• TSG helped a commercial card program generate $5M/year

Software• TSG helped a global software provider monetize payments to create

over $10M/year in new revenue

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Helping Software Companies Monetize Payments

Diving into the payments industry can be perilous and lead to countless questions. How do I become apayments player, and what kind? How big is the market and how much can I make? TSG has theexpertise, contacts and big data to help answer those questions and effectively monetize payments.

Navigating Payments

• How to become a payments player

• Payments education

• Benchmarking data

• Revenue and pricing strategies

• Risk/Underwriting review and compliance audit

• Operational review and audit

• Legal, compliance, and audit advisory

• Strategic roadmap (sponsors selection, RFP)

• Supplier RFP, vendor recommendations

• Technology audits and gap analysis

Expertise

• The TSG team consists of proven industry leaders that have serviced leading software companies and are well positioned to build-out your go-forward plan while helping you avoid barriers to entry.

Industry Contacts

• TSG knows the providers and can pin-point the appropriate partner to create a cohesive solution for you and your customers. Blaze a new trail with an experienced guide that will reduce complexity, speed up implementation, and maximize your investment.

Comprehensive Data

• TSG’s Acquiring Industry Metrics (AIM) platform provides access to dynamic market data to drive pricing strategies, understand the competitive landscape, and achieve higher profitability. Validate your plan with real market data from 3.7 million merchants.

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B2B Merchant Acquiring – How to Win?

Understanding how to optimize commercial card payments is key to capturing the B2B acquiring market.The ability to reduce B2B suppliers’ collection efforts and costs associated with card payments will makeyou and the services you offer invaluable.

B2B Market Dynamics

• Market Penetration

• Ecosystem Participant Dynamics

• Challenges for B2B Acceptance Penetration

• Leading B2B Companies

Education Strategy

TSG Can

• Review, advise, and provide strategies to merchant acquirers to enable commercial card payments

• Identify how merchant acquirers are capturing market share and/or ways merchant acquirers can capture more check and ACH volume share in B2B

• Uncover independent software vendors (ISVs) within the U.S. that offer a general accounts payable/receivable and/or broad B2B software product

• Performed in-depth research and provide detailed market reporting on the B2B and Commercial Card market

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Analytical Platforms


Acquiring Industry Metrics (AIM) is the most trusted, timely, and largestplatform for payments and market data. AIM provides acquirers actionableintelligence and critical insights to drive high performing portfolios

THE Big Data

Solution for

Payments

Companies

AIM is the Only Tool that Contains Key Pricing/Profitability Benchmarks on the Acceptance Market1

AIM Tracks Over 45% of U.S. Card Accepting Merchants2

AIM Members Have Realized Millions of Dollars in Margin Advantages 3

AIM is utilized by half of the top 60 U.S. merchant acquirers4

AIM is a secure, seamless, and scalable platform5

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AIM Overview

Approximately 50% of all card-accepting merchants in the U.S. that

is continuously updated/growing

Based on merchant population by state; covers

99% of U.S. zip codes

Stemming from 30+ contributing portfolios

Vertical Strategy

Pricing Optimization

Comparative Port. Performance

Go-To-Market Pricing

How Do

Clients

Use AIM?

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Go-To-Market Pricing by Merchant Group by Tier

Retail and Personal Services are more competitively priced for merchants with $250K-$1M in annual volume.

Minimum: 1.67%Lower Quartile: 1.95%Median: 2.05%Upper Quartile: 2.26%Maximum: 2.49%



Healthcare

Personal Services

Retail

*Go-to-Market Pricing is defined as Gross Revenue Charged to Merchant less Total Equipment and Other Income

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Sales Model - New Volume Added Indices

This graph represents a change index for each sales model. Each sales model growth, or change, is relative to itself. The left half represents the actual change from 2015-2018 and the right side is the forecast through 2021. For example, New Volume Added for the Bank channel (purple line) is expected to increase 70% by 2021.

1.041.09

0.93 0.94

1.59

1.52

2.05

1.43

1.70

1.29

1.101.09

1.04

0.70

1.00

1.30

1.60

1.90

2.20

2015 2016 2017 2018 2019 2020 2021

Digital, Bank Sourced, and Integrated channels have positive momentum in

terms of New Volume Added.

DigitalW-2 Sales – Feet on the StreetW-2 TelesalesIntegrated Referral PartnerBank Sourced1099 AgentAssociation

Actual Forecast

13


AIM Merchants and U.S. Population Correlation

This illustration overlays the U.S. population and the AIM MID concentration. There is a 99% correlation between the two population sets. Additional, strong correlations to desperate

data sets should provide confidence in the AIM population and calculated metrics.

CAAIM - 13.7%U.S. - 12.1%

VT0.3%

FLAIM - 7.1%U.S. - 6.5%

TXAIM - 8.7%U.S. - 8.8%

NYAIM - 5.2%U.S. - 6.0%

ILAIM - 3.5%U.S. - 3.9%

DC0.3%

ND0.3%

WY0.3%

DE0.3%

AIM correlates exceptionally well

to the U.S. population.

= AIM MID Concentration

= Higher U.S. Population

= Lower U.S. Population

Top Value = AIM MID Concentration %Bottom Value = U.S. Population Concentration %

Key

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Pricing by StateGross Revenue Charged to Merchant by State (Sept’18 TTM)

OR$1,262

OH$1,219

NY$1,471

MS$1,136

Average = $1,329

MS$1,384

Average = $1,149

Average = $1,034

OR$1,089

NY$1,128

OR$1,165

OH$1,233

NY$1,252

MS$708

OH$1,031

Above Market Average Below Market Average

Geography and Industry should be

considered for pricing strategies.

The all-in merchant effective rate for three industries (Restaurant, Education, and Retail) and one volume tier ($250K-$1M) is displayed here. Below are a few key observations:

• MS rates are highly industry dependent• NY rates are consistently higher than average• Restaurant and Education verticals do not have

clear regional patterns• Retail has the lowest effective rate in the Southeast

and surrounding states

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Most companies have data. AIM was created because what most don’t have is the ability to access data and compare it to peer benchmarkseasily and accurately, particularly in the payments market. AIM and its user interface AIMVisionTM offers this ability in frictionless way.Because of this, AIM provides tangible and measurable ROIs outweighing the cost of the subscription hundreds of times over.

Cutting Edge Software for Payments Analytics

AIMvisionTM

• Performance metrics from nearly 4 million card accepting merchants delivered via a seamless user interface (AIMvisionTM) as well as through client-selected APIs

• Customizable dashboards with reports viewable from various dimensions including Industry, Region, Size of Merchant, and Vintage

• A key tool for payments industry companies to optimize back-book/front-book pricing, vertical strategies, and manage attrition at the executive and analyst level

Unicorn PlatformTM

• TSG’s proprietary platform that powers AIM is built to store and provide access to a wide variety of transaction, demographic and consolidated payments data

• It has the flexibility, scalability, and security to receive data inputs from multiple data sources and file types, allowing for combined harmonized data sets that will provide new insights in an aggregated and anonymous way

16


Build reports for your

portfolio and populate a customized dashboard

Chat feature to get real-time

assistance

Customize attributes of each dashboard report and see a preview in real-time

Export data into csv or get an API key for

direct integration into internal

reporting

Flexibility, scalability, and security to

receive data inputs from multiple data

sources and file typesAfter upload, TSGand client will validate and review the data

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On an annual basis, TSG evaluates and delivers a detailed assessment of API set, Dev Tools, sandbox and emulator by actually conducting an integration into the gateway via an eCommerce Application as well as evaluating documentation.

TSG sends real transactions from two U.S. locations and pings 24/7/365 from over twenty different U.S. and international locations.

TSG reviews data daily to uncover and report on issues. Detailed reports are delivered weekly, monthly and semi-annually.

GEM is the only platform in the market that benchmarks from the merchant,developer and gateway performance perspective. Current subscribersaccount for an estimated 66% of all payment gateway volume in the U.S.

MERCHANT DEVELOPER PERFORMANCE

eCommerce Merchant Experience & Account Boarding Assessment

On a semi-annual basis TSG will complete an actual (anonymous) process of opening a new merchant account to obtain the ability to accept cards online.

This process measures and benchmarks the experience from the merchant’s point of view and is compared against the industry’s top providers.

API Set & Developer Tools Assessment

Real Transaction Metrics

CASE STUDY: TSG’s boarding process for GEM provided insights for one gateway that merchants/partners were likely having issues with during the integration process; new procedures were put in place due to these findings.

CASE STUDY: As part of the developer experience review TSG was able to determine that a gateway’s API documentation was fragmented and difficult to follow compared to other GEM subscribers.

CASE STUDY: A gateway had an outage during a peak shopping period that GEM demonstrated was more significant than their internal reporting indicated.

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Market Your ProwessGEM provides gateways with third-party credibility and allowsthem to market their performance publicly to prospects andcurrent clients. Recognition from TSG’s Gateway Awards providesfurther honor for gateways to hang their hat on.

Something From NothingGEM is not dependent on a gateway’s IT resources. Minimalinteraction is required to board a gateway on the GEM platform.Allocation of resources is at the discretion of the subscriber andtheir performance goals based on GEM data.

Gateway Credibility

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Awards Calendar• “Developer/API Awards” - MARCH• “Real Transaction Metrics Awards” – JULY• “Merchant Experience Awards” – OCTOBER Recent Winners


eCommerce Merchant Experience

GATEWAYWEBSITE LAUNCH

SHOPPING CART APPLICATION UNDERWRITING INTEGRATION COSTTIME TO LAUNCH SCORE

(35 = MAX)

Company Here Rating Here Rating Here Rating Here Rating Here Rating Here Rating Here Rating Here Rating Here



● ● ● ●●

<1 Day● ● 27




Average 2.6 2.6 4.0 3.5 4.0 2.7 3.7 23.1

● Easy ● Fairly Easy ● Neutral ● Fairly Difficult ● Difficult5=Easy, 1= Difficult

• 3rd Party = (requires merchant to find this solution)• 3rd Party Integration = (requires third-party services that have already been integrated with the provider)• Seamless in-house or white-labeled solution =

●●

●

For this exercise, TSG completes an actual (anonymous) process of opening a new merchant account to obtain the ability to accept cards online. TSG rates providers across seven different categories:

website, shopping cart, application, underwriting, integration, cost and time to launch

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API Set & Developer Tools Assessment

GATEWAY

API

RESPONSE CODES

VERSIONING

“Best of Breed” API INDEX SCORE

1 2 3 4 5 6 7 9 10 11 12 13 14 15 16

40 43 49 49 37 49 48 40 46 43 44 39 45 47 28 43

28 28 18 18 29 35 34 30 13 15 5 13 7 0 15 0

10 7 10 9 8 0 0 0 8 8 8 0 0 0 3 0

78 78 77 76 74 74 72 70 67 66 57 52 52 47 46 43

Max Scoresfor each area:

API = 60Resp. Codes = 30

Versioning = 10

Braintree vs. Top 15 Anonymous Gateways

Is used to understand how a gateway’s API can affect the merchant, developer, and ultimately the consumer

1

2

3

From a developers perspective, TSG

has reviewed the documentation

and functionality of 16 leading

Payment Gateway APIs.

This report utilizes API documentation to understand the uses and functionality

TSG analyzes and scores 13 items to benchmark gateway APIs against one another

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Real Transaction Metrics

TSG Measures and Benchmarks Gateways Based on:

1) Response Time

2) Gateway Access

3) Gateway Availability

4) Transaction Average Response Time

5) Transaction Success Rate

6) Authorization Failures

All metrics are calculated by

utilizing real cards to complete

real transactions, just as a

consumer would experience

at a merchant. Not simulated.

Shows the merchant’s experience with the gateway, which is not always the same as internal monitoring would show

1

2Gateway performance is becoming increasingly important because of the proliferation of IP transactions

3Failures, unrelated to the cardholder account, equal approximately 15M credit/debit transactions each month (or $1.2B in lost sales)

22


Gateway Performance Metrics

Overall ResultsReporting Period: March 2019

GATEWAYGATEWAY RESPONSE

TIME (SECONDS)GATEWAY

ACCESS (%)GATEWAY

AVAILABIILITY (%)

TRANSACTION AVERAGE RESPONSE TIME

(SECONDS)

TRANSACTION SUCCESS RATE (%)

AUTHORIZATION FAILURE (%)

GEM INDEX

KEYU.S.

TOTALSINTL

TOTALSU.S.

TOTALSINTL

TOTALSU.S.

TOTALSINTL

TOTALSTOTAL TOTAL TOTAL

1 0.3833 0.6499 99.942% 99.991% 100% 100% 1.4486 100% 0% 94

2 0.2802 0.4924 99.938% 99.968% 100% 100% 1.2832 99.865% .0158% 95

3 0.1484 0.2376 99.900% 99.930% 100% 100% 1.0995 99.459% .0573% 78

4 0.2516 - 99.853% - 99.999% - 1.0738 100% 0% 97

5 0.2808 0.4669 99.944% 89.565% 100% 100% 1.2010 100% .0054% 100

6 0.1997 0.3587 99.935% 99.988% 100% 100% 1.4195 100% 0% 94

7 0.2542 0.5046 99.923% 99.943% 100% 100% 2.2138 100% 0% 70

8 0.2954 0.6218 99.934% 99.957% 99.987% 99.979% 1.5097 99.730% .0208% 75

9 0.2381 0.5033 99.934% 99.985% 99.999% 99.999% 1.3465 100% 0% 97

10 0.2653 0.4720 99.780% 99.730% 99.999% 99.961% 1.6270 99.865% .0313% 64

11 0.2544 0.4727 99.905% 99.943% 99.999% 99.998% 0.9743 100% 0% 95

12 0.1974 0.3279 99.379% 98.343% 100% 99.998% 1.1910 100% .0052% 95

AVERAGES 0.2462 0.4480 99.690% 99.791% 99.9991% 99.9900% 1.3390 99.9099% .0010% 87.83

A large U.S. fast food chain recently reported that every additional second added to their

average transaction speed cost them $1 million a day. Gateway 7 below, saw the slowest

transaction speed, however saw 100% success rates while several others did not. From

week-to-week and month-to-month gateway performance continuously fluctuates.

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Market Intelligence


Market Intelligence Services

Vertical Strategy Playbook

PaymentsPulsePayments University

BrandInfluence

Custom Research

Competitive Intelligence

Market Insights

Most forward thinking organizations leverage market and competitive intelligence to support a wide range of strategic decisions. TheStrawhecker Group’s full-service market intelligence team can provide the support you need through extensive primary and secondaryresearch, unmatched in the payments industry.

TruShopOn-DemandIntelligence

eReport Subscription

25


eReport Subscription

Tap into TSG’s thought leadership with an eReport subscription, which provides direct insight into TSG’s view andanalysis of the industry, existing and new players, products, services, and emerging and future trends. Frominvestors to acquirers to networks, an eReport subscription is key for any company that touches the industry.

Marketing & Sales

TechnologyOperations

& RiskStrategy

C-Level Mgmt

Knowledge Center

“TSG’s eReport subscription provides

timely, credible insights for our team. We

always look forward to the next release!”Ivy Boehm, VP Market Insights, Merchant Services – JPMorgan Chase

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When One Isn’t Enough

• Major Players - card networks, acquirers, gateways, processors, technology providers and private equity firms have all found unparalleled value through their subscription.

• Company-wide Access - internal distribution of the latest research can provide cost savings, increase employee knowledge, and lead to new strategies creating a high ROI.

• Primary/Secondary Research - all eReports are built from the synergies of extensive research and the teams’ years of industry expertise.

Subscription Details

• eReports - all subscriptions kick-off with web portal access to TSG’s Signature Collection, which are TSG’s most popular eReports. This collection contains approximately eight eReports, but subscribers can expect to receive an average of 17 eReports annually.

• Hours - allocation of 60 ‘On-Demand’ research hours


Evaluation and Testing

• TSG is capable of evaluating and testing several types of businesses and business partners:

▪ Acquirers

▪ Banks

▪ Point of Sale

▪ ISVs

▪ Resellers

▪ ISOs

▪ Gateways

▪ Shopping Carts

Merchant Perspective

• TSG can test various sales channels and initiate sales processes from the perspective of various merchants:

▪ eCommerce Start-up

▪ Restaurants

▪ Retail

▪ Hospitality

▪ Salon

▪ Fitness

▪ Healthcare

▪ Education

TruShop

See your business and your

partners through the eyes of

the merchant

TruShop is TSG’s answer to mystery shopping engagements. TruShop allows you to see your business and yourpartners through the eyes of the merchant. The service provides an unprecedented look at how merchants viewyou and your competitors businesses.

Insights

• TSG will evaluate the capabilities, services, responsiveness and overall perceptions through the eyes of a merchant:

▪ Customer Service

▪ Risk/Underwriting

▪ Integration

▪ On Boarding Processes

▪ Application Processes

▪ Overall Merchant Experience

▪ Product Features/Capabilities

▪ Social Media Tracking

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TruShop- Samples The images shown represent a small portion

of actual output.

28

Buy/Sell Consulting


Buy/Sell Consulting

Buy-Side• Buyers use TSG’s due-diligence subject matter experts for support on a variety of key decision criteria can affect the value of the property. TSG assists buyers by acting as their advisor as they

evaluate the financial value, benchmarking key performance metrics, determine risk, and evaluate the value of any technology assets.

Sell-Side• The key factor in a successful asset sale is understanding the true value of your enterprise. Value is defined as the “amount a buyer is willing to pay.” TSG has a pulse of the market and performs

an extensive evaluation of value drivers to insure potential “sellers” understand the value of their company in the marketplace – prior to starting the sales process. In addition, buyers can usethe data to assess offers that have been received for an accurate and fact-based assessment of the offer.

Private Equity• TSG can help private equity firms understand the landscape before investing and can build a market analysis to determine which investment is the best fit to create the highest ROI. TSG provides

investors and financial institutions with the documented valuation information needed to support funding events.

Restructuring & Re-Capitalization• TSG can facilitate strategic exercises to help forge a new path ahead and can help with implementation of a new structure to ultimately maximize the value and performance of the entity.

30+ACQUISITIONS

AND INVESTMENT

TRANSACTIONS

250+COMPLETED

PAYMENTS CO.

VALUATIONS

8 of 12OF THE LARGEST

PAYMENTS TRANS

IN THE LAST YEAR

$10-100MTYPICAL DEAL

RANGE

TSG has become the go-to adviser for deals ranging between $10M - $100M

30


Portfolio Benchmark Analytics

Custom Benchmark AnalyticsComparisons are developed by creating a synthetic comparison portfolio, based on the same Merchant Category, Size and Volume profile of the target portfolio. The key performance metrics of both portfolios are then compared.

The analytics are calculated using volume weighted average metrics TSG’s Acquiring Industry Metrics (AIM) platform, which contains nearly half of all US card accepting merchants.

1) Gross Revenue % of Volume – charged to merchant

2) Total Net Revenue % of Volume – earned by acquirer/ISO before downstream payments

3) Annual Account Attrition - % Merchant Accounts that stopped processing and no longer

generate revenue

4) Annual Volume Gross Attrition - % volume loss on attrited accounts

5) Change in Retained Account Volume – annual volume change in merchants retained

6) Annual Volume Net Attrition – Annual Volume Gross Attrition net of the Change in Retained

Account Volume

+8 Years of DataTSG has developed Custom Benchmarks based on a client’s mix of

merchant size and type for the following performance metrics andcompared these to the client’s actual metrics:

31


Valuation and Assessment Services

TSG has performed more Valuations of payments companiesthan any other firm, completing more than 250 Value Exercisesin the last decade including:

• Acquiring Enterprises

• Payment Technology Companies

• Fintech Organizations

• Payment Gateways

• ISO Portfolios

TSG has provided transaction support to firmsthat have ranged in scale from $3M to $3B+ intransaction assessed value

TSG has Carved a Real Niche in the Payments Space

“TSG was instrumental to the success of ourtransaction and the valuations they performedwere critical to our decision-making.”Top 50 Merchant Acquirer

“Our company found TSG’s process to beefficient and innovative; most importantlyhowever it was successful by giving us theproper focus to understand where we couldimprove our company.”Payment Gateway Subsequently Acquired ByAn International Third-Party Processor

32


Valuation and Assessment Services

Objective1) Gain an understanding of the target’s historical performance

2) Model future cash flow generation potential

3) Assess the marketability of the target

4) Consider potential buyer interests

5) Establish a fair market value of the target

Assessment Component Options

✓ Financial Valuation

✓ Value Estimate and “What if’s”

✓ Portfolio Benchmark Analytics

✓ Third-party Agreement Review and Business Components Assessment

✓ Operational and Risk Assessment

✓ Technology and Product Offerings Evaluation

✓ Technology Infrastructure and Data Security Review

✓ Sales Channel Review (Staff, Agent, ISO, Integrated, Referral, etc.)

✓ Requirements to Reach Scale in a Growth Modeling Evaluation

TSG Methodology• Isolate the value of the base portfolio and the sales engine

component

• The valuation is determined by using the income discounted cash flow method based on forward-looking unlevered after-tax cash flow

• This approach is a widely-recognized approach to valuing interests in privately-held enterprises and is common in the merchant acquiring industry

• The range of value estimated does not consider balance sheet assets and liabilities

33

ANALYTICS + CONSULTINGThe Strawhecker Group (TSG) is a fast-growing analytics and consulting

firm. The company serves the entire payments ecosystem, from fintech

startups to Fortune 500 companies. The firm provides its clients with

advisory services, research and analytics to help them plan and execute

their strategic initiatives. Based in Omaha, a recognized payments industry

hub, TSG is an established leader in this high-growth, ever-evolving space.

1,000+Clients advised,

including many in the Fortune 500

40+Of the top 50 merchant acquirers served, including 9 of the top 10

23+ YearsAverage

Associateexperience in the

payments industry3.7+ MillionCard-accepting merchants in TSG’s AIM analytics platform, driving millions of dollars in ROI for its users

250+Completed payments company valuations; as well as ~30 buy/sell/investment advisements

tsg overview - the strawhecker group documents - t1… · comprehensive data • tsg’s acquiring...

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