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One of the electronic transactions industry’s most active buyers of independent sales organizations and other transaction-services firms says the steady flow of transaction revenue these businesses generate is attracting increasing interest from pension funds and private-equity players, thus driving up valuations.
TransFirst, a Dallas-based processor that has grown from 2.5 billion transactions in 2000 to a current run rate of about 9 billion on the strength of acquisitions, sees the price tags of target assets going up. “Valuations for high-quality companies with defined strategic objectives are up 20% in the past year,” says Andrew Rueff, vice president for mergers and acquisitions at TransFirst.
The longer-term upward pressure is even more impressive, he says, pointing out that multiples have bumped up to 3.5 to 4 times net revenue, from 2.5 to 3 times a few years ago. The availability of outside capital from interested investors accounts for much of this, he says, adding that the improvement in the economy has helped, as well.
