TRK Advisors’ principals have unmatched experience in evaluating and executing credit card portfolio sales, having individually advised on more than one hundred transactions. We are deeply aware of the state of the buyer market and individual partner strengths and weaknesses and our process is designed to bring each all of these facts to the forefront. When considering this option it is critical to structure the process from the very first day to maintain your leverage and maximize your outcome (both financial and card holder experience). Our process, experience and relationships allows TRK Advisors to:
- Develop initial market value estimates to dimension options
- Objectively analyze market value versus ongoing returns if retained
- Forecast potential returns if specific program improvements are made
- Compare all of these options for financial and risk results
- Overlay card holder impact, product set changes, service levels and other elements
- Develop business case documents and presentations
- Assist in all levels of negotiation and transaction process
- Ensure best offers received at lowest transaction cost
Avoid The Most Common Mistake in Getting a Portfolio Valuation!
In many ways the market for card portfolio sales is stacked against anyone evaluating a sale: the buyers have much more experience than you and the ‘broker’ market for generating purchase offers is typically paid by the portfolio buyer. This creates a significant structural problem: the broker works for the other party, but you are sharing all of your information with them. This puts their interests out of alignment with yours. Before ever sharing information with a broker (perhaps expecting a ‘free’ analysis in return) make sure you sign agreements stipulating how much everyone gets paid and, we suggest, pay all fees yourself. This ensures the experts is aligned to you, not the other side of the transaction.
For an article with more detail around ensuring you get the best outcome in a portfolio sale click here
Case Study #1:
Sell… or maybe not!
Sale Is Not Always The Best Option
TRK Advisors was approached by an issuer which was having trouble managing its credit card program. Resources were limited, compliance and other burdens were mounting, risk levels were not well understood and prior pricing decisions resulted in a money losing business. This issuer presumed they would have to get out of the business. TRK Advisors was able to develop several purchase offers despite the difficulties in the portfolio, but nonetheless demonstrated that some specific program changes would improve performance enough to favor retaining the program.
Outcome: This issuer did decide to retain their card business and worked with us to improve its performance. They now have a better performing card program that, if they ever do want to look at sale again, will be even more valuable to the buyer market.
Case Study #2:
Find the Best Partner, Save Your $
Seller Almost Wasted $200,000+!
An issuer contacted TRK Advisors to discuss potential sale of their card portfolio. They had been in conversations with a broker that promised to get them ‘market prices’ for ‘free.’ They had already started to send information to that broker. With our assistance they were able to determine that the broker stood to make approximately $250,000 if that portfolio was sold and that this fee was paid by the buyer. This made the issuer uncomfortable for several reasons so they ended this broker conversation and engaged TRK Advisors to act on their behalf. We generated offers higher than would have been possible under the prior broker’s compensation levels, advised the issuer on all aspects of the evaluation and sale mechanics, and the issuer developed a long-term partnership well-aligned with their interests. All at a much lower cost.