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Payments Forward: State of the U.S. Economy: The M&A Temperature in Payments

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Expanding on our Executive Interview Series, Payments Forward is a cutting-edge video podcast series designed to explore the evolving landscape of the payments industry. Whether you’re a fintech enthusiast, a payments professional, or simply curious about the space, Payments Forward will keep you informed.

In our first podcast, Jared Drieling, TSG’s Chief Innovation Officer, talks with Guy Harris, former Head of Merchant Services at Bank of America, and Angela Zhang, Principal of GI Partners.

Together, they discuss the macroeconomic landscape, investment sentiment within the fintech market, and perspectives on payments M&A.

Intro: Jared D.

Welcome everyone. Good morning, good afternoon, or good evening, wherever you may be attending from today. My name is Jared Drieling, Chief Innovation Officer here at TSG, and I’m thrilled to introduce a new series we have developed called “Payments Forward.”  

The Payments Forward series is truly designed to showcase key payment industry leaders and their perspectives on important topics within the payments landscape. Our aim is to educate the broader payments community through these insightful conversations with C-level executives, and together, we’ll delve into payment themes shedding light on trends, perspectives, and insights from these industry leaders.  

But before we start our conversation today, for those of you who are not familiar with TSG, TSG is an analytics and consulting firm focused on the merchant acceptance space. But we do provide support for the entire payments ecosystem, serving fortune 500 leaders to the world’s most valuable brands. We provide strategic solutions, market intelligence, and analytics to empower those clients with actionable and accessible information.  

Q: Jared D. 

So, with that said, let’s dive right in.  

This inaugural series of Payments Forward is focused on a pivotal aspect of influencing the health of the payments industry and commerce at large – the economy. We’ll navigate through our guest insights on the macroeconomic landscape and offer a glimpse into what we can anticipate for the latter half of 2024. Next on our agenda, we’ll dive into the prevailing investment sentiment within the expansive fintech market. And then, wrapping up our dialogue, we’ll glean some perspectives from our guests on M&A activity, the landscape as it relates to the payments realm, uncovering investment prospects within the merchant acceptance domain.  

So, without further ado, let me introduce all of our audience members to our distinguished guests for today’s engaging discussion. 

Our first participant is Guy Harris. Guy has a payments career spanning over 30 years. He brings tremendous knowledge and experience in this space. As a member of the board here at TSG, Guy supports the development of TSG products and services, guides our strategic initiatives, and contributes to thought leadership content. Guy’s appointment follows his retirement as Head of Merchant Services at Bank of America, where his leadership was fundamental to developing the bank’s next generation of merchant services solutions. Before Bank of America, Guy served as the President of North America in global revenue for Elavon. In June 2023, he joined Chargebacks911 as Chairman of the Board, and he is also the former president and current member of the board of directors for the Electronic Transaction Association, also known as ETA. So, welcome, Guy.  

Our second participant is Angela Zhang. Angela is a Director of GI partners and focuses on software, fintech, and payment investments. GI is a four billion private equity firm based in San Francisco. Angela currently serves on the boards of Daxko, Togetherwork, and Rectangle Health, which are ISVs that span the health and wellness, nonprofit, and healthcare industries. Angela has also been recognized for her leadership. She was named one of the top female dealmakers by The Wall Street Journal and in the Electronic Transaction Association, again, ETA, their 2020 40 under 40 award. She’s also been featured in Buyouts Women’s Private Equity class of 2022. So, welcome Guy and Angela.  

Our first topic is the macroeconomic environment. 

As we reflect on the economic landscape of 2024, the economic conditions in the United States are characterized by a mix of progress, challenges, and ongoing adaptations to various factors. There are many key factors shaping the nation’s financial health and growth prospects. 

First, let’s acknowledge the ongoing recovery from the COVID-19 pandemic. While progress has been made in restoring economic activity and employment levels, challenges do persist with certain industries and regions experiencing uneven growth. Employment growth remains robust, signaling a positive trend, especially in the labor market. However, inflationary pressures are another focal point and may be creeping back up for some recent reports.  

Finally, we have the consumer spending variable, which continues to be a driving force behind economic activity and appears to be relatively healthy, reflecting improved consumer confidence and sustained demands. However, some of these numbers point in one direction, while others point in the opposite. We hear the economy is probably headed toward a recession, and then no, it’s not. Inflation is plummeting, but it has started to rise again.  

However, by almost any measure, the economy is in better shape today than most forecasters predicted even a year ago. Still, it hasn’t quite fully recovered from the pandemic. From our perspective, our proprietary data tools, which we offer to a variety of different clients in the payment space, primarily through our AIM data product, have allowed us to gain a glimpse into the economy from a card acceptance standpoint and understand the health of consumer spending as it relates to electronic payments. Through those data points, on one hand, we’ve continued to see good year-over-year consumer spending growth in the early part of the year, despite some pockets of weakness. But it appears that the overall economy is on the upswing, at least from a consumer spending standpoint. Even at the SMB, or small and medium business, level, where weakness was seen significantly throughout the pandemic, we are now seeing improvement in growth. So, when evaluating card-accepting small merchants through our AIM platform, we can observe that small businesses, on average, have continued to grow as well. 

So, let me throw the first question over to our panelist, Guy, today. Guy, can you help us understand all of this noise in the market as it relates to the health of the economy during your time leading those large payment organizations? Clearly, you faced your fair share of economic headwinds and tailwinds, so it’d be interesting to get your perspective and how you view the economy unfolding during the latter half of 2024. 

A: Guy H.

Well, firstly, Jared, thank you for having me, and good to meet you, Angela. It’s good to join you on this. 

First and foremost, having just retired or left Bank of America, one of the largest institutions in the U.S. with the biggest group of economists and specialists that could possibly be employed, your point is interesting because as I was departing last year, we were heading into a recession. And I remember well that the discussion was “What type of recession will it be?” Will it be a deep curve followed by a deep recovery? etc. But the consensus was we were heading for a recession. And the good news for us is whichever metric you look at, that didn’t take place.  

From a payments perspective, which is really what we’re talking about today, the thing we always look at and track is the volume of payments that are taking place, both from a consumer and from a business perspective. We’ve had an industry, and one of the reasons it’s such an exciting industry, why so many people are in it, and why there’s so much investment taking place is that throughout the bumps, payment volumes continue to grow. And so, although the speed and the acceleration may well vary consistently, somewhere between 4 and 6% volume takes place. 

Now, if you ever want to be in a market, you want to compete in a market that’s growing rather than fighting over market share in a declining market. It would explain one of the reasons why everybody likes to be in the payment space, and then it will depend on which vertical you are within the payment space. 

But the unpredictability is the challenge. You mentioned inflation. The interest rate that was going to come down was based on inflation being under control. Suddenly, today it went the wrong way, and I think it’s gone back up to 3.5%, I think they announced this morning. I saw the stock market was off as a result of that. So, you get that volatility that occurs even though we were predicting it was going to come down. And then, the second key one is really around the GDP, which relates back to what’s the real growth that’s taking place? And we’re still sitting on a prediction of about 2.5% of GDP growth. 

So, the overall economic picture is better than we had hoped. From my lens, whether it be a bank in the past looking at it or whether it be looking at the fintechs that I’m involved in today, the markets remain positive. They’re growing. There are opportunities. And we’re not facing a downside type of environment which ultimately will reflect back into valuations and into some of the other things we’re going to talk about. 

Q: Jared D. 

That’s right. Well, I appreciate those insights, Guy.  

Angela, you’re coming from a little bit of a different perspective, and it’d be interesting to hear how you view the economy not only in the first half of 2024, but more importantly, what do you expect to see unfold the latter half of 2024? 

A: Angela Z.

Yeah. Thank you so much. Pleasure to be here. Excited to get into the discussion.  

I kind of agree with Guy. I think that we are in a substantially better place than everyone had thought a year ago. And ultimately, my opinion is reality over expectations, and where we are right now shouldn’t be challenging, but everything feels kind of okay. If you zoom out and just look at the fiscal worries of the U.S., we have the highest debt to GDP in peacetime, interest is the largest line item in the budget, but the debt markets seem to be more resilient than we thought, and nothing is kind of really cracked. There’s a ton of geopolitical worries, political unrest, and, let’s all remind ourselves that this is also an election year, although it doesn’t quite feel like it. 

And this comes back to the “feeling okay” point. I think I mentioned this, but on volumes, we did see at the GI portfolio level some pullback in corporate spending, not taking it down, but just delaying it because there was some uncertainty next year or last year. And we’re seeing all that come back. 

The stock market is off to a great start in 2024. I think it’s the best Q1 performance since 2019. And the economy, all the indicators or GDP growth, faster than expected, consumer confidence rising, there’s a lot of excitement about AI, gen AI, and expectations for interest rate cuts. So, I think the outlook is really going to depend on what you think was going to happen, and I think we’re seeing that in the stock market. Guy mentioned people were expecting four, five, six rate cuts with inflation where maybe it’s one or two now for the rest of the year, but some of that is already priced in. I’d say from living through COVID in this industry and then facing this uncertainty, the biggest thing is just to have a plan B. We operate business as usual with all the data points we have, and if need be, we have to just pivot really quickly. And I think a lot of our management teams have gone through that and lived that and are able to kind of think on their feet a little bit more and adjust as needed. 

Q: Jared D.

Very good. And just to switch gears a little bit here, let’s touch upon the health of the general M&A space within the broader fintech area.  

Looking back to Q4 2023, the fintech industry appeared to be dominated by a prevailing sense of pessimism. This negative outlook was largely due to because of the challenging macro-level factors. Obviously, there were significantly lower valuations for some of those fintechs and a lack of M&A and IPO activity. Clearly, higher interest rates and lower capital availability are on top of the geopolitical tensions as well. But now, in early 2024, we seem to be dealing with a slightly different beast.  

Last year may have been a quiet one for fintech-focused M&A activity, but this year, I believe, holds more potential for a surge in activity. And we’ve already witnessed some large deals taking place in 2024. So, from our angle, it appears that some of the key stakeholders are adopting a more positive view of the sector’s trajectory. Looking ahead to 2024, the latter half of the year, most experts believe that we will not see further increases in interest rates, but, clearly, we may never return to the low interest rates of Q4 2021.  

So, with all of that said, Angela, you know, as it relates to the fintech space, are we seeing growing activity again? Curious to see what you’re witnessing from your angle as it relates to the general M&A appetite as it relates again to the fintech space. 

A: Angela Z.

Yeah absolutely. Jared, I think we could’ve taken what you said now and flashed back to last year around this time and the expectation for 23 to be a really robust deal year in the second half, but I do think we are sitting in the same type of position in that it should be a very good deal environment. As it relates to fintech, I think 2023 really was a year of stabilization. If we look back at multiples and investments in the public sector, 2023 underperformed other tech markets but gained a ton of traction relative to the massive growth that happened prior to that. And multiples, you know, have come down. But they’re on a medium basis, something like 15 times EBITDA. Pretty reasonable. And while deal activity has been down about 70% from 2021 peaks, right now, it’s closer to the normalized deal volumes. If you took a straight line and drew everything outside of 21, we’re kind of at that level. There are deals getting done.  

But it really depends. I think Guy talked about this earlier on the end market and the financial profile of the business that we’re talking about. For A-plus assets, there will always be A-plus prices and lots of interest and buyers, but it’s a different story depending on where you are. 

You know, I think we’ve seen tech lending folks thinking about the mortgages, and that’s kind of down. You know, office of the CFO is a new buzzword, and that’s kind of on the “up and up.” And one of the things we think is still keeping folks from getting deals done is just seller expectations for values. In 21, I was worth X, and now you’re telling me I’m like X -30%? So, I think that will continue to take time to unwind, for folks to say, “hey, like, I actually do need a liquidity,” or “I have some investments I’d like to make.” And ultimately, what your company is worth is what someone is going to pay for it.  

I think the other big shift is this growth versus profitability debate. I think there was a huge focus on not “growth at all costs” being profitable. And I’ll take that even further now to say it’s actually not “growth at all costs.” You have to be profitable, and you must grow. You have to actually still grow. There is a meaningful discount for businesses that are not growing. So, if you think about a breakeven business growing at 10% versus a breakeven business growing at 20%, there’s like a magical 20% marker of this is actually worth thinking about. And if you’ve got a really profitable business that’s flat, no one’s really giving you a lot of credit for that now. So, I think the pendulum continues to swing. “Grow at all costs” now and then, it’s just to be profitable. And now it’s like, be Goldilocks, grow at 20%, and then also kind of be profitable, maybe hit that rule of 40 and be a 20% EBITDA margin business. 

But I think there are still lots of deals getting done, lots of different flavors. Certainly the appetite from the investment community, there is a lot of capital, there is a desire to deploy, there is a desire to transact. People are just picky, and people are diligent in business models, moats, growth, profitability. What are you going to do differently? 

People are getting creative. I think there’s partial monetization of deals pulling LPs into deals. A lot of private, certainly strategic M&A, like adding on certain capabilities that you can just plug in. And we’re also seeing divestitures from larger companies, and more focus on the core. I think this is one where, at least for folks on my side of the table, you’re really waiting for the pockets of opportunity. And when it’s there, you’re leaning in, and you’re waiting for that investment. That’s again, Goldilocks for you, depending on your investment mandate.  

But deals are getting done, and I think that we’ll continue to see more of that in the next six months. One of the things I did in advance of this podcast was speak to a bunch of intermediaries and bankers and just ask them, how what’s your pipeline looking like? And a lot of companies are getting ready to do things. So, hopefully, that comes down the pipeline. 

Q: Jared D.

And Guy, are you witnessing those same sorts of trends from your angle? Obviously, you’ve spent a good majority of your career at those large FI institutions, along with a merchant solutions group. So, you’ve spent many years focused on the fintech space. Are you seeing those same trends unfold as well? 

A: Guy H.

Well, Jared, it’s an interesting lens because you’re right in that I’ve got to see both sides of the story. Whilst I was at the large financial institutions, we were, on one hand, tracking those fintechs because of a competitive nature. And then secondly, looking for opportunities that Angela referenced. If you take a large bank, whether it be U.S. Bank or Bank of America, what you have is distribution, for instance, and you’re building capability. So, you then start to say, do we build? Do we buy? Do we partner? And in the past, banks have historically liked to build too much because that’s the culture or used to be the culture. And of course, the to-market time was way longer than fintechs in terms of their ability to get products delivered. 

But my point is that even as a bank, when you were looking at what you were thinking of buying, you could go for a high-value, significantly expensive product that’s already mature, but actually the banks don’t want the customers. The banks have their customers and they have the distribution. What they’re looking for actually is the technology that will accelerate the solution they can offer those customers. 

So, on the one hand, over the last 12 months, there have been some bargains to be had when you’re buying, and you can get some really good product at a very low price, and that’s positive. But now, as I sit on the other side of it as Chairman of Chargebacks911, a fintech that Angela just described, I’m absolutely having the opposite conversation. That and you stole half of my speech when I talk to investors because A-plus gets A-plus and A-plus is “are you not a startup?” You have real revenue, real customers. You are profitable, your revenue is growing, and you have a product or a capability or a technology that is a significant solution, not a copy, or something that differentiates yourself. And now, if you have all those things, you tick all those boxes, guess what? We’ve also now got a market where there’s money. And there’s people wanting to put money into businesses that tick all those boxes. They don’t want the high-risk startup scenario, or if they do, they’re not going to pay much for it. 

It’s a case of understanding how you position where you think that fits best from a strategic perspective, from an investment perspective, and from a sell perspective. The good news is that suddenly deals are taking place. And let’s not underestimate the Discover-Cap One, which is actually not about distribution. I actually think it is about payments because sitting within Discover is the whole debit network and the whole payment processing capability that Cap One can use and utilize with their distribution, but most important, it’s a very large deal that’s taking place.  

So, there is no “one fit all.” I think what’s happening is that there is money to be placed, there are deals now I think are going to start occurring, there’s going to be consolidation taking place. There’s no doubt about that. We see it. Exit strategies are to consolidate. And you’ll see a number of the companies are buying up a bunch of organizations to get to scale, to get to value, which will ultimately mean an exit for them as well. So, it’s exciting and it’s a great space to be in.  

So, you go back to my original comment, an economic environment where payment is growing at a phenomenal pace, with money to be invested. And when you think about which verticals in which industries you want to be in, you want growth, you want margin, you want innovation, and you want disruption. 

We are in all of those spaces as an industry. And that’s why this is exciting, and that’s why there is so much activity taking place. 

Q: Jared D.

Those are fascinating insights. So, let’s drill down a little bit deeper here and focus on the payments category or merchant acceptance category, specifically within the fintech umbrella again as it relates to M&A activity. So, conditions could be ripe for more payment specific deals in 2024, especially as the legacy players seek to add unique technologies or the struggling startups find themselves in need of an exit plan, for example. 

And as we’re all aware, there’s several large acquirers that have a history of M&A activity, which could shortly begin, or they could become much more active in this space. Again, pursuing those technologies that support payment opportunities or distribution channels that are core to their business model. So, you know, from our perspective, there appears to be a growing consensus that these strategic players will be more active in M&A, not only to extend their reach and growth areas, but to tuck in assets that could accelerate some of their strategic initiatives. On the other hand, PE firms are also expected to be on the hunt for targets as well, especially given the potential for more distressed properties on the market, for the combination of investor impatience and smaller, attractive, payment-focused companies low on cash could lead to that heightened dealmaking situation. You know, here at TSG, we also follow a lot of the key payment trends and topics very closely. And as we’re all aware, there’s a heightened awareness around several key payment categories, and one of those growth areas, which has been a consistent theme over the past few years, has been the integrated payment trend, or SaaS platforms, offering payment processing. 

However, on the flip side, just a few years ago, all of the industry attention was on Buy Now, Pay Later. And we witnessed a lot of activity from acquisitions and partnerships. And that trend has dissipated a bit as we all know.  

So, Angela, it’d be interesting to get your take on M&A activity, specifically as it relates to the payment space. And from your angle, you spend a lot of time having conversations with those software entities and identifying software opportunities with your focus. Do you view that trend continuing over the next few years or is there a potential major opportunity within the payments acceptance space that we’re not aware of that could take the crown and attention away from some of those other core focus areas? 

A: Angela Z.

Not to make a plug for TSG, but if you look at your benchmarking data, all the integrated solutions across every single MCC perform better than the non-integrated pieces. So, yes, we feel like software is still a really good place to be. Integrated payments are still a really great place to be. And maybe I’ll segment my comments into two parts. There’s the vertical and then the horizontal. There’s vertical MCCs and some of our businesses, like Daxko, is health and wellness. We’re really good at software and payments. And there’s something to be said about being deep and going deep and being a really easy-to-explain story, right? 

And then there’s a lot of horizontal tools now that we’re seeing, like B2B is a good example of something that’s more horizontal that could provide a lot of value to someone like a guy sitting and thinking about how to get more dollars out of the system. But no matter where you sit, it is important to find your pocket and to find the growth and ultimately let your customers, your merchants, guide you on what’s going to deliver more value, because that is what’s going to get to a good outcome, whether it’s a strategic or private equity. You’re doing something that’s valuable for your customers, which makes it hard for them to move, which makes it hard to replicate. 

And those are all the positive things that we like about integrated payments. I’d say on the GI side, we’ve now had a bigger exercise around if you think software is a really good distribution channel. What other things are there that you can sell through that channel based on that great merchant relationship? 

So, payments was one of them, Buy Now, Pay Later, certainly merchant cash advance. There’s this whole embedded finance angle and now we’re thinking even more broadly around how we get more dollars into this system and then also continue to monetize those dollars over and over again. So, helping our merchants grow is really helpful because there’s more volume. They do better. We do better. There’s also a lot of thinking now around what else do you need as a small business that comes with additional dollars that we can go provide? That could be something like a loyalty, like small business insurance, a ton of things that we’re thinking through. And all of those, at the end of the day, someone’s paying for that. And that is ultimately still payment dollars and things that we can think about. So, we continue to be really excited there and then lastly, I think, yes, deals are getting done. I guess the one part of it is for every deal that gets done, there’s like four or five that don’t get done because they didn’t hit the value they wanted or someone dropped out or something like that. 

And it’s funny, when you unpack some of the deals that do get done, oftentimes there’s only one or two people at the finish line. And it’s not like before, right? You know, almost COVID 2021 or like eight people on the finish line. Now you’ve got one or two. So I think what that means for you as a business, we’re thinking about exit, is now the strategy might be a little bit different, right? 

As Guy was talking about, maybe you think hard about, “hey, where am I really finding my pocket? Who am I going to be most valuable to? And how do I create those conversations early on, before I want to run a process or think about exit?” Because oftentimes those are going to be actually the most fruitful conversations. 

And from my side, if I’ve had a long-standing conversation and relationship with a company and there’s a clear path on what we’re going to do, and I have a great understanding of what makes them special and unique, it’s also easier to lean in as we think about where are we going to invest. So, is it going to be that business that I’ve known for five years or that new business that I’m just learning about? 

So, I think in this environment, there’s kind of the business decisions that you would make around “how do I become more valuable to my customers and generate more value and grow?” Then there’s the other kind of process and other considerations around exit that may require just a different kind of orientation in this environment. 

Q: Jared D.

Very interesting. Guy, what’s your take on that? 

A: Guy H.

Well, I’ll come back to Integrated payments, of which I spent a lot of time in my Elavon-U.S. Bank days. And really, at that stage, I think it’s matured so significantly that it’s almost table stakes. If you’re going to be a player that wants to be in one of the biggest growth spaces, both what vertical you’re in and integrated payments, is a must if you really want good margins and growth.  

I don’t think anybody should spend too much time researching whether or not it’s a good model. It’s a slam dunk. But when I was in that stage of investment, it was actually more to do with at that stage, the technology that would get you to be an easy-to-integrate organization. So, if you’re a payment in the payment space, are you a company that would add value to a vertical because you are easy to integrate the multiple payment mechanisms into one place? Because the one thing about payments that once you get under the bonnet, it is very complicated for the different integrations. And this assumption that they all just plug, in my opinion, and I won’t name names. Some of the large institutions, financial, payments institutions that report to have integrated their various businesses and their various platforms, there’s this magical picture of everything going in and coming out in one way. And in reality, I can say as an experience, we partnered with people where ultimately they weren’t integrated and you had all sorts of things you had to do. So, have you got a technology stack that actually is truly integrated? And therefore, you can go after customers.  

The payfac model, by the way, is another great flex point in terms of as organizations said actually I need the control over my customers, and do I really need total control over risk? Or do I really just want the customers to think I’ve got total control? So, there are various things in that. And I laughed about buying Alipay later. I wrote down is that a trend or a fad? Are the two different? I think they are, and I’m not saying that Buy Now, Pay Later is going to disappear. It’s not. But you know, everybody goes after what they think is the shiny toy for a period of time. And then it’s not the shiny toy because you go back to the business basics, which is, you know what? How do we differentiate ourselves? What’s the real product? What’s the real value proposition?  

What I do see and you’ll you see it in all the communications, the globals, the Fiservs, and the big guys are all positioning and you looked at what happened with FIS and Worldpay. Look at the rationale as to why they split up. It was the need to get to be able to buy and be flexible again. So, they are all in their own individual way, positioning that something’s going to happen. And something in my mind is they’ll be buying companies that either meet the distribution, the product or the growth requirements for all those types of organizations. 

So again, if you’re the seller and you’re thinking about where you’re going to sell or who your potential acquirers or buyers are, you’ve got to work out which of the kind of organizations that would see your solution as offering significant value to them, as opposed to just thinking about your own business. And, you know, I’ve spent now nearly a year in Chargebacks911, I remember when I went into payments, payments was the back-end of banking, and nobody really wanted to be in acquiring because it was where you went to if your career was dying. It’s true. And that was what was happening. And then suddenly everybody woke up to the fact that if you don’t own payments within your customers, it’s fundamental to your relationship. And suddenly it’s gone from a back office to a front office to a strategic plank to your business. And if you think about Bank of America and U.S. Bank, etc., it’s absolutely about owning the relationship with the customer. 

And then chargebacks, everybody says, oh, it’s this thing that has to take place. Well, actually it’s not. It’s more than that. It’s a customer experience. It’s “how do you grow your relationship with your customer, how do you make it a better experience,” etc. Not an overhead. And so, it can actually generate some revenue. The point I’m making is that suddenly if you look at investment, there’s lots of investment coming into the chargeback space. And I don’t mean just to Chargebacks911, my company, I mean to space as well. But why are the investors coming into that space? Well because they’re looking at the average returns, the growth, the penetration, because the penetration is really quite small in terms of real use of technology to drive up and fix the problem. 

So, to Angela’s point, if you’re on the sell side, you’ve got to work out which part you’re going to play in the overall payments ecosystem. And is it a space where you can be competitive because there are multiple people in some of these spaces, and therefore there’s no point in you just doing the same as everybody else. You could still exit and you can still get some value, but you’re not going to get a differentiated value. And then, you should take the whole of the what’s the differentiator that you actually have, and what is it? Is it technology? Is it distribution? Is it product? or is it people? And then work out strategically who could you sell to? Who is it that your buyer is likely to be? and if you put that into your overall leadership team’s thought processes and not just first and foremost, build your business, build your solution, get that momentum that we talked about. But then you actually do have to strategically start to think about what does it look like in three years time. 

In five years time. Do we take an investment? Do we take a small investment? Do we take a big investment? Do we exit? And that can be dependent on a number of factors.  

What other interesting thing that I’ve heard from that you’re hearing, of course, is that the investors now are looking for a much earlier return. Before the five, seven years seemed to be almost acceptable. Now it’s “hold on a minute.” We’ve been in three years. Why is an event not taking place? And so, as the owners, there’s a pressure now coming to say “okay what is your exit or what your growth that’s going to make it exciting enough for us to stay in?” All of these things are what I think make it an extremely exciting place because there is no one fit. But as in everything, the strong get stronger and the weak get a bad price. 

Closing: Jared D.

Well. Fabulous conversation. 

Ladies and gentlemen, as we wrap up our guest speaker series focus on the economy and M&A activity within the payments space, I’d like to take a moment to reflect on the valuable insights we’ve gained and thank Guy and Angela for today’s participation. 

Through this series, we’ve had the privilege of hearing from esteemed experts who have shared their perspectives on the economic landscape and the dynamic M&A activity within the payments industry space. 

Our guests have provided invaluable insights into the current climate, shedding light on those key trends, challenges, and opportunities shaping the payments landscape. So, stay tuned for more engaging conversations and insights in the future. Until next time, take care.