By Jeff Fortney
It could be said that 2017 will be remembered as the year of big acquisitions. It seemed we couldn't go more than two months without hearing about another sale or merger. These announcements usually follow a similar pattern: reference the synergy of the two companies, talk about how the acquirer saw opportunity to expand into a specific niche and then, finally, share a projected close date (which usually falls two to four months into the future).
The ensuing conversation throughout the industry is centered on two basic questions:
It can be said that everyone in the industry is impacted by an acquisition, directly or indirectly. The impact may be felt immediately at the time of close, or it could follow a few months later. The biggest concern I hear whenever a sale is announced can be summed up in one word: fear. I hear comments like the following: Is the ISO channel dying? They only mention ISV. What can I do to protect myself?
In previous articles published by The Green Sheet, I talked about change and the steps necessary to adapt to change. I outlined several ways to help you continue to sell and even expand your business. However, I didn't mention how to overcome the emotion that surrounds change. The truth is fear can – and will – paralyze your efforts if you don't address it head on.
The ISO channel is not going away. It has evolved over time and will continue to evolve. The most successful payments salespeople evolve with the market. They have survived major changes in the past – and even thrived. How you respond to these changes depends on your role in the industry.
Independent agents' actions are directly tied to their income protections. They must determine whether they will still be paid for their efforts after an acquisition. That aspect is contractual and should be referenced in agreements merchant level salespeople (MLSs) sign. Pull out your contract and review it, looking for clauses referencing changes in ownership or your residual payment. If they are missing, pause your efforts and determine what needs to be done to ensure you won't be left out in the cold. And keep this in mind when you sign future agreements.
The next step is to confirm that your ISO partner is protected, which depends on the ISO's current processing partner. Your ISO has the same fears you do. If the business has partnered with a company that was recently purchased, your ISO is probably reviewing the governing agreement as well.
After you've done your research and are confident you are protected, refer to my previous suggestions regarding change. Just remember, the key is to always be selling.
It could be said that an MLS's steps may actually be easier than those for offices submitting 25 or more deals a month. An MLS's efforts pertain to the individual alone; an ISO has to protect both a company and several agents.
Most ISOs will be less concerned with contractual provisions and more concerned about delivery after an acquisition. Will new owners continue to deliver the products and services you need to be successful? Will the company's philosophy and core values change? Will the same staffing levels be maintained? Changes in any of these areas could hamper your growth.
Another question is whether you will now be a little fish in a big pond instead of the other way around. If you're an ISO processing between 25 and 75 deals a month, you may have been in the upper tier with your ISO before, but you could now drop to a lower level. This could impact the support you receive and your ability to reach key people who helped you in the past.
Think of your company as a merchant. In most cases, merchants pay little attention to their processing unless something goes wrong. At those times, they are more likely to explore other options.
Don't stop selling, but do research your options. Find someone who will fit your needs today and into the future. You may even find someone who can help take your business to the next level.
And find out where a prospective partner falls in the payments value chain. Is the business a true processor or an ISO? If it's an ISO, what company does it use for processing? Ask questions about future plans so you don't have to look for another partner in a year or two. Do thorough research on the candidates. In this case, Google and other search engines become trusted advisers.
Although 2017 may become known as the year of the acquisition, we will see more acquisitions in 2018. It may be worth your while to do your research now – before any potential sales. Remember, change does not need to be negative. It can represent an opportunity to help you reach your goals.
Jeff Fortney is Vice President, ISO Channel Management with Clearent LLC. He has more than 17 years' experience in the payments industry. Contact him at firstname.lastname@example.org or 972-618-7340. To learn about how Clearent can help you grow faster and go further, visit www.clearent.com.
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