Amid a broad slump in mergers and acquisitions, Omar Choucair, CFO of finance and accounting software provider Trintech, helped his firm pull together $230 million in debt financing to acquire two business units from payments processor Fiserv.
Four lenders — including Morgan Stanley Capital Partners, Deutsche Banks, Cliffwater and Barings — provided the all-debt club financing that Dallas, Texas-based Trintech used to fund the acquisition that closed last week, according to emailed statement sent to CFO Dive by a spokesperson.
The purchase from Brookfield, Wisconsin-based Fiserv comes as the volume of $100-million-plus deals worldwide plunged 37% in the first half of this year relative to 2022, undercut by rising interest rates and a gloomier outlook for the economy, CFO Dive previously reported. Nonetheless, there has been a flurry of recent deals in the payments industry.
In an interview, Choucair said he believes Trintech’s acquisition is one of the larger recent software deals, attributing the firm’s ability to pull it off to Trintech’s business model and the fact that the privately-held company is profitable and has good margins.The five-year loan is pegged to SOFR, the benchmark rate that has largely replaced LIBOR.
Choucair, who declined to disclose the rate of the loan, said Trintech made the strategic decision to move ahead with its acquisition after looking at potential targets for four years. It was the one that “made sense,” he said, in spite of the higher interest rate environment.
“You can never time the market,” he said, in a discussion on the rate environment. “Yes, [rates are] higher than we would like but I would say two things: we can always refinance and we’re doing some interest rate hedging.”
In addition, he said valuations are lower than they had been, so even though you are paying more for the financing, the purchase prices are often lower.
Under the terms of the deal, Trintech is acquiring two reconciliation software solutions from Fiserv, known as Frontier and Accurate, according to the company release. The transaction will add 400 “bluechip” customers to Trintech, which will also bring over 70 to 80 employees to add to its roughly 650-person workforce. The transaction will also broaden Trintech’s global reach and likely increase revenue by about 25-30% next year, Choucair said.
“We’re very bullish on this business and this opportunity,” Choucair said.“The M&A market has had a lull, but for us this is the right time and we were able to find the right asset and we were able to find the right partners — and we’re ready to go.”