Case Study 1

Market Pay carve out

Objective

PSE was engaged by a Private Equity firm to conduct due diligence for its potential purchase of a fintech being carved out from a major European retailer. PSE’s task was to evaluate and report on the target’s technical, operational, strategic and commercial processes. 

Approach 

Based on its expertise, intense discussions with the target’s management team and review of technical and commercial documentation PSE produced six reports within a tight deadline: 

• SWOT analysis, competitor assessment and reviews of technology architecture, operation services and commercial model 
  
• Detailed analysis of the operational model and back-office processes 
  
• Detailed analysis of EU T3/T4 SME opportunities, routes to market and the target’s business case 
  
• Evaluation of target’s technical, operational, and back-office IT processes and identification of areas for automation change and improvement 
  
• Assessment of a gateway provider as a potential partner for the target, or alternatively as an acquisition target in its own right 
  
• Review of operational and technological development, examination of capacity to expand and deliver new services, and assessment of business continuity plans and capabilities

Result

Following delivery of due diligence reports by PSE, the PE firm was satisfied of the soundness of its investment plans. The acquisition, worth €300 million, was announced one month after PSE delivered its final report.  

Case Study 2

Digital wallet buy side due diligence

Objective:

To support a PE bid team in evaluating the e-wallet business as well as providing market knowledge input into the initial bid preparation for the sale of the asset. 

Approach:

PSE undertook detailed analysis of the prospectus under the PE’s direction (i.e. a brief to examine specific aspects) and focused on 

• An assessment of the credibility of the five-year vision and the capability of the management to reposition and achieve the targets set. 
• Overview of the end to business selling, marketing and operational development and delivery models (as well as including looking at recent acquisitions) as can be best assessed from the prospectus.   
• Review of the current product offering and its fit within the payments landscape plus an overview of the key product gaps and services/products opportunities. 
• A review of competitors and an assessment of the asset’s capabilities to win against the major players retain customers and minimise attrition. 
• An assessment of the fit between current marketing and selling capabilities and those required to exploit the opportunities highlighted within their forward plan (including opportunities for partnership JVs and M&A). 
• An overview of the potential EU and domestic market regulatory challenges facing the asset and verticals in which they operate, e.g. Germany. 
• Suggestions for innovations, new products as a means of extending the product portfolio, diversification and repositioning. 

• Review of critical success factors, key enablers, inhibitors, risks, risk mitigation, resources and skills. 
• An overview and some high-level modelling of the financials and customer growth to lead their credibility. 

Result: 

The PE firm incorporated PSE’s commercial due diligence within its strategic approach to the asset. 

Case Study 3

Private Equity Investment in Payments Carve-Out 

Objective:

Assist a Private Equity company assessing the opportunity to invest in one of Europe’s largest supermarket Groups who were planning to carve out their internal payments company and associated operational functions. 

Approach:

PSE assessed the payments division, looking at the operational model and services. This covered acquiring, issuing, onboarding, support, risk and back-office operations. PSE also assessed the IT platform, looking at functionality, capacity, resilience and future development capability. 

carve out vision was to leverage private equity funding to enable the independent payments company to become a commercial processor, card scheme issuer/acquirer offering services to larger merchants – as well as continuing to support the Group. The Group had invested heavily in building a highly sophisticated multi-country omnichannel acceptance service as well as acquiring, issuing and ATM operations. 

Result:

PSE gave an overall positive assessment while also highlighting areas where the payment division fell short of best practice and recommended some organisational, operational and platform changes to move to a market-leading position. Based on PSE’s report and recommendations, the PE investment went ahead and the now independent company continues to grow successfully.