[Scott Williams]

With either case. What formula do you use to determine the price to pay for a ISO or funder? A certain % times the net or gross income? what %?

[Sean Cash]

With either case. What formula do you use to determine the price to pay for a ISO or funder? A certain % times the net or gross income? what %?

Good question. There's not a lot of precedent for it. In at least one case there's a funder actively buying ISOs where there is an immediate multiple on annual profit paid up front. To prevent their investment from immediately getting washed out by the top talent quitting (which happens in ISO buyouts and alignments all the time), the owners of the ISOs have to continue managing the business for 3 years and they get paid a salary plus profit sharing for that duration. Afterwards they can do whatever they want.

[Jared_Weitz]

Good question. There's not a lot of precedent for it. In at least one case there's a funder actively buying ISOs where there is an immediate multiple on annual profit paid up front. To prevent their investment from immediately getting washed out by the top talent quitting (which happens in ISO buyouts and alignments all the time), the owners of the ISOs have to continue managing the business for 3 years and they get paid a salary plus profit sharing for that duration. Afterwards they can do whatever they want.

I think it depends on the buyer. Some big funders who want to grow direct business would want to purchase an originator versus a funder (who depends on ISO's for business). I myself know that being able to generate your own quality demand is not that easy and therefor is coveted by some who can only either A) generate X amount on their own, or B) rely on ISO Business to survive. Also some funders who took big credit lines NEED to put out a certain amount of money per month to avoid unused line fees as well as be able to keep up with the other big players and for those guys too it would be prudent to buy an originator. Just my 2 cents.

[rphillips]

World Business Lenders is interested in purchasing high quality ISOs and potentially smaller funders that self generate their business. Please contact Ron Phillips 212 271 8263