Selling a portfolio is a significant decision. It’s a pivotal moment. Whether you need fast compensation, want to exit the payments industry, or reinvest in your business, selling your account portfolio can help you achieve any of these goals.
However, selling a merchant account portfolio is a process. Knowing how to navigate this situation is crucial. Otherwise, you risk leaving money on the table. So, what comes next? How do you know how much your portfolio is worth? By reading this guide. Let Velocity Funding help.
In this post, you’ll find a merchant portfolio and step-by-step instructions for selling one. We’ll also cover determining your portfolio’s worth, understanding when to sell, and why you shouldn’t sell your portfolio yourself.
What Is a Merchant Portfolio?
Portfolios are collections of things. In the investing world, a portfolio is a term for a collection of investments such as stocks or bonds. A merchant portfolio is a group of merchant accounts. Companies open these accounts and become merchants to accept multiple payment types from customers besides cash.
This account collection is an information database that houses transaction volumes, agreement terms, and residual income data. It represents relationships you’ve spent time and effort building. A portfolio also represents the recurring revenue you depend on.
How to Sell a Merchant Account Portfolio in 4 Steps
Answering “What is a merchant portfolio?” is simple. However, this simplicity doesn’t negate the importance of your portfolio. Selling your portfolio involves several steps. Understanding what to do during each phase can spare you from confusion, frustration, and making mistakes. Follow the detailed steps below.
Step 1: Research Potential Buyers
Before completing anything else, it’s best to research and identify the right buyer. Look for established companies with a history in the payments and funding industries. Another helpful tip is to search for customer reviews or testimonials, giving you an idea of what to expect during and after selling a merchant account portfolio.
Additionally, investigate potential buyers to see if they buy portfolios similar to yours. Ensuring you find a compatible buyer can additionally streamline the sales process.
Finding a prospective buyer willing to consult with you is also a good idea. A buyer that attempts to rush you into signing anything is not advisable. For example, Velocity Funding always ensures we answer questions from prospective sellers. We can walk you through how to sell your merchant account portfolio.
Step 2: Gather Portfolio-Related Information
Any reputable buyer will require information about a portfolio before making an offer. What you need varies from one lender to another. However, as a general guideline, have the following information available:
- Transaction volumes
- Residual reports
- Client retention rates
- Merchant contracts and agreements
Having your supporting information ready makes selling a smooth, straightforward process for sellers and buyers. It also clearly shows you what your portfolio is worth.
Step 3: Receive an Offer
You’ll wait for an offer after completing your application and presenting portfolio-related information. Unfortunately, it’s impossible to predict when this will happen. Some potential buyers may wait days or weeks before sending an offer.
If you choose Velocity Funding when selling a merchant account portfolio, you can depend on receiving a written offer quickly. In most cases, clients get an offer within 24 hours. We utilize our expertise and exclusive proprietary software to form our valuations. Other companies might not provide an offer that reflects how much your portfolio is worth.
Step 4: Complete the Sale
You’ve reached the final step in selling a merchant account portfolio! At this point, working with a reliable buyer such as Velocity Funding makes completing this final stage fast and simple.
When discussing a merchant portfolio, the right to refuse is essential. If you accept a buyer’s offer, your processor has the first right to refuse. Fortunately, as Velocity Funding’s experience has proven, most processors will not exercise their right to refuse and instead accept a purchase.
However, some processors may unintentionally delay this step, resulting in sale-related delays. Once this is complete, both parties can finalize selling a merchant account portfolio.
How Much Is My Portfolio Worth?
Knowing whether to sell your portfolio involves knowing its value. If not, how do you know if you sold at a reasonable or fair price? You can obtain an accurate idea of your portfolio’s worth by looking at several vital factors, including:
- Residual income
- Number of accounts
- Growth potential
- Account attrition
- Industry trends
Understanding these factors is crucial to selling a merchant account portfolio. Even one mistake in these calculations can result in a portfolio selling for too much or too little.
When Is a Good Time to Sell My Portfolio?
Timing is everything. It’s also a vital factor regarding when to sell your portfolio. You don’t want to wait too long for every condition to be perfect. However, rushing into a sale can mean leaving money on the table.
Most sellers base their decision to sell based on the following factors:
- Personal or Professional Concerns: Emergencies happen, and businesses need money. Whether it’s something unexpected or a challenge you’re prepared for, selling your portfolio could be an ideal financial solution.
- Market Conditions: Markets fluctuate often. Capitalizing on a favorable market can make the present a good time to sell your portfolio while receiving maximum compensation.
- Growth Plateaus: Some portfolios struggle to achieve consistent growth. If your situation isn’t improving or worsening, selling your portfolio could be smart.
Are you unsure if now’s the time to sell your merchant account portfolio? Contact Velocity Funding. We provide accurate and fast merchant account portfolio valuations. Plus, we buy portfolios. If you’re ready to sell and we want to buy, Velocity Funding will send you an offer within 24 hours.
Why Shouldn’t I Sell My Portfolio Myself?
Our company values transparency. Because of that, we don’t hide the fact that selling your portfolio by yourself is possible. However, it isn’t easy.
Several pitfalls of selling a portfolio on your own include:
- Time-Consuming: This process requires a lot of effort and time to complete, from marketing your portfolio to negotiating with buyers.
- Taking an Offer That’s Too Low: If you’re unsure of your portfolio’s value or don’t know when it’s a good time to sell your portfolio, you could be duped into taking a lowball offer.
- Possible Legal Issues: There is an immense legal side to consider before selling a merchant account portfolio. Neglecting the importance of legalities could mean unknowingly violating industry regulations and facing liabilities.
Choosing Velocity Funding means saving time and effort. You also have peace of mind knowing you receive a maximum-value offer for a portfolio you’ve worked hard to build.
Velocity Funding hopes this guide helps you sell a merchant account portfolio. Do you need help understanding how much your merchant portfolio is worth? Are you ready to sell ASAP? Contact Velocity Funding. We provide in-depth valuations and can answer questions such as “When is a good time to sell my portfolio?”
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Dean Caso is a Managing Partner at Velocity Funding, which he founded with this company’s other Managing Partner, David Caso, in 2006. Caso graduated in 1983 from Babson College with a Bachelor’s degree in Finance and Investments. With over 35 years of experience, Caso has acquired over 300 credit card processing portfolios. He has a superior eye for opportunity and an unwavering commitment to excellence. Caso’s leadership instills confidence, fosters innovation, and inspires those under his professional command. His decades of industry experience and proven track record of success continue to drive Velocity Funding’s growth and industry-leading presence.