Large US deals dominate transactions
Three large deals targeting US-based companies made up much of Q2’s total M&A deal value within payments. The biggest of these was the May 2021 acquisition of Divvy Pay, Inc, a payment and business budgeting platform, by global cloud-based software service provider, Bill.com Holdings, Inc. The US$2.5b transaction will support Bill.com to centralize its financial operations and achieve ambitions to generate an additional US$100m of annual revenue.
Also in May was the US$2.2b deal by Advent International Corporation, a US-based global private equity (PE) firm along with Eurazeo, a French-based PE and VC firm, to buy Planet Payment, Inc. Planet, an international payment and transaction processing service provider. They will use the investment to develop innovative and diversified payment solutions.
In June 2021, US-based technology solutions provider, Deluxe Corporation, acquired US-based online merchant processing service provider, FAPS Holdings Inc, in a US$960m deal. This deal enables Deluxe to double its annual revenue to US$600m and improve its competitive positioning as a merchant service provider.
Valuations figures don’t tell the real story
With only a small number of payments deals with disclosed financials, the data around valuations are unlikely to reflect the true state of the market. Figures show that the median EBITDA multiple for all disclosed deals year-to-date decreased to 6.6x in 20211 from 18.3x in 2020. The median revenue multiple for the same period also decreased from 3.8x in 2020 to 1.7x in 2021. However, we believe that, despite these figures, valuations within the payments segment have not declined.