Zack Buckley on $PRTH's take private

Today we’ve got a really interesting one. I’ll start with the disclaimer: I own the stock, so I always think that makes the stock a little more interesting for me. Full disclaimer and disclosure are in the show notes and at the end of the podcast.

We’ve got Zack Buckley back on the podcast, and the company we’re talking about is Priority Technology Holdings. The ticker is PRTH. Zack knows the company really well, and that’s going to shine through in the first half of the interview when we talk about the different segments and break them down.

The really interesting thing to me—the reason I’m involved and the reason Zack’s coming on the podcast—is that the chairman and CEO offered to take the company private in November. Zack published a public letter, and in the back half of the show, we’re going to talk all about that event. That’s what’s got me really excited. I think I know event-driven situations decently well, and this one is really interesting to me. There are a lot of things that are flashing signs that say, “Interesting, weird, strange,” and that always gets me excited.

We’ll talk about that in the back half of the podcast, and Zack knows a lot about it as well. Keep all the disclaimers and the “not investing advice” language in mind. There’s a full disclaimer in the show notes.

Before we get there, a quick disclaimer: Nothing on this podcast is investing advice. I’ll disclose that I have a position in the stock we’re going to talk about today, so you should keep that in mind with everything we do. I’m sure Zack does, too, because he’s on here talking about it. There’s a full disclaimer at the end of the podcast and in the show notes, including the legal disclaimers.

I’m happy to have Zack Buckley from Buckley Capital on for what might be the sixth or seventh time. I’m not sure. How’s it going, buddy?

Hey, I’m good. How are you, man?

1. What Priority Technology is and why Zack thinks it is mispriced

Doing good. I’m really excited to talk today. The company we’re going to talk about trades under the ticker PRTH. It’s Priority Technology Holdings. It’s a really fascinating company, and I know you’ve been involved. You published a letter, I want to say, last November or December. I’ll stop rambling and let you give the overview. It’s got a really interesting situation, which is why I’m so excited to talk about it. What is PRTH, and why is it so interesting right now?

Absolutely. Before I get into Priority, I just want to start with a disclosure, given that we’ve written a public letter. We’re a shareholder of Priority, and last November we publicly opposed a preliminary take-private proposal made by Priority’s chairman and CEO, Tom Priore. Obviously, I have a strong view here. Everything I’m discussing today is based on publicly available information, and when I discuss valuation, those are my estimates and opinions.

The basic thesis is pretty simple. Over 90% of the company’s business is either recurring or reoccurring, providing a very high level of predictability. 60% of its business comes from the high-quality Treasury segment, which is effectively an 80%-plus EBITDA-margin, recurring-revenue software business that has tripled EBITDA in the last 4 years.

Despite all that, Priority is trading today at between 4 and 5 times free cash flow for a business that’s consistently growing free cash flow per share at 10% or more. Multiple valuation analyses suggest that the true intrinsic value of PRTH is significantly higher. I wrote about that in the public letter, but I want to talk a little bit about the segmentation of the businesses because I think that’s really important.

2. The three segments, and why Treasury is the whole story

Can I just push you? I’ll note that I’m going to include a link to Zack’s letter from November or December, whenever it was, in the show notes. If you want to see that letter, you can find it there. I’m sure we’ll talk about the event, but please break down the segments. I just wanted to note that.

Of course. Priority is not just one payments business. It consists of 3 businesses with very different economics: Merchant Solutions, Payables, and Treasury Solutions. I think Treasury is really the key to understanding why the consolidated company is significantly undervalued.

Priority does have a payment-processing business within it, similar to Shift4 or Global Payments, but Treasury is really the majority of the value today. Treasury generated $215 million of revenue and around $180 million of adjusted EBITDA, or roughly an 84% EBITDA margin. That’s like database or very-high-margin software-type economics.

The biggest component is CFTPay, which came through Priority’s acquisition of Finxera in 2021. Imagine you’re a debt-settlement company with hundreds of thousands of customers. A consumer might deposit $500 or $700 every month into a dedicated account while the debt-settlement company is negotiating with creditors.

Someone needs to establish and maintain those accounts. You have to maintain the ledger, maintain and accept deposits, and handle ACH transfers, wires, and checks. All of this needs to be reconciled, and eventually someone needs to send money to the creditors. CFTPay provides that infrastructure.

One of the most exciting things about it is the distribution. Priority isn’t going out and acquiring each individual consumer or customer itself. It’s integrating with enterprise partners that can then bring tens or hundreds of thousands of underlying accounts onto its platform. Priority can establish 1 enterprise relationship and then monetize a very large number of end customers. That has created extremely attractive unit economics.

In terms of how they make money, they charge enrollment fees when an account is established. They charge a recurring monthly subscription or servicing fee as the account remains active, and they charge transaction fees when the money is sent by check or wire. It’s highly recurring, essentially software-like revenue, and it has grown very quickly over the last 3 or 4 years while also maintaining an extremely high margin.

People think of Priority as a payments business. I think of it more as a conglomerate of various businesses, but CFTPay is the most important business, which is why I’m starting with that. Maybe I’ll pause there. If you have any questions, we can jump into anything specific.

I have questions on both the business and the events, but if you want to go through the segments, keep going through the segments, and I can come in with the questions at the end.

3. Finxera, CFTPay, and the enterprise distribution model

Sounds good. Going into Finxera just a little bit more, it was acquired in 2021. When they acquired it, it was a subscale business, but it still had a 93.5% gross margin and a 68% EBITDA margin. As they’ve more than tripled the business over the last 4 years, it’s grown to over an 80% adjusted EBITDA margin.

It’s been an incredible business, both from a growth standpoint and from a margin standpoint. I want to harp on that because today Priority has been compared to Shift4, Global Payments, and other payments businesses. While that is a minority of what they do, the majority of what they do is truly CFTPay. I think that’s an incredible business that deserves a much higher multiple than the payment segment.

If you look at the metrics, average billed clients have grown very dramatically. Money-transmission revenue has compounded in the 20s. There’s been really attractive growth over a multiyear time frame.

4. Would a strategic pay up?

Merchant Solutions is a business I’m going to spend less time on. It’s processing card transactions for merchants, and its economics look much more like the conventional acquiring industry, like Shift4 or Global Payments. There was a reasonable comparable transaction in June of this year involving a business called Payoneer that was sold at about 8.3 times EBITDA. If you just use that valuation, which I think undervalues Priority, you would still get $12 a share. Priority trades around $5.50 today.

So, you still get over 100% upside from here, but again, I think it's worth more than that. I'm really not going to focus on the payables business. It's just too small to be meaningful. I think the 2 main segments to really talk about are Treasury and Merchant.

While there is a 3rd segment, I just don't think it's worth harping on because it's relatively immaterial at this point.

5. The payments-pocalypse: is this a melting ice cube?

No, that's great. Let's get to the event—that's what really excites me here—but let's stick with the business. I do have some questions on the business for you. I think you touched on it a little bit, but there's an event we're going to talk about. Anyone who's been following the markets knows that there's been the SaaS apocalypse and the payments apocalypse over the past year, right?

You mentioned several of the comps. Shift4 is the one that comes to my mind. I understand the businesses aren't completely comparable, but I think Shift4, just because so many value investors are in it, is the one that pops to mind. They've got the guy who's over at NASA now and huge share buybacks. It's a pretty controversial stock, but it's cheap; the huge share buybacks are the thing that pops to mind. There are certainly others. All of these guys have been slaughtered, for the most part, over the past year to 18 months.

6. Welcome, and why I own this one

I guess I would just start off at a very high level. You've kind of laid out why you think this business is a little bit different from some of those, but what gives you confidence when you're buying this that you're not buying a terminal zero? Do you look at the rest of the payment space and say, “Hey, this isn't exposed to some of the brutal competition, or the Meta Muse, or all these things that are going to displace these things”? What gives you the confidence here?

I guess the first thing I would point to is the Payoneer transaction that I mentioned. That literally happened in June, so it incorporates the payments apocalypse and the SaaS apocalypse, and it still was 8.3 times EBITDA. That would be about a $12 stock for Priority.

Again, that is for the payments component. If we want to simplify it for the audience and say roughly 60% of the business is more of a software, recurring-revenue business and roughly 40% is payments, that's an oversimplification, but I think it's close enough. The SaaS businesses that are growing at the level that Treasury Solutions is growing still command double-digit EBITDA multiples.

Those businesses are still trading at double-digit multiples. If you look at Toast, PAR, and various businesses that are relatively similar in the payment space, you're still looking at double-digit multiples. That's the first thing I would say. You also have a private transaction that literally just occurred in the 8.3-times range, so I think you have enough from that perspective on the multiple basis.

7. The Q2 print, the guide, and the accounting complexity

From a business-quality standpoint, Treasury Solutions isn't going anywhere. AI isn't displacing that. There's really no way that AI would have anything to do with that because it's integrated financial infrastructure. AI isn't going to set up bank accounts for customers. It's not going to set up those transactions. Those things are not at risk from AI. Go ahead.

I'm just laughing because you are probably right, but over the past week, my feed's been blown up with this new Instinct chatbot. I don't know if you've seen that. Meta launched Muse this morning. I do hear you that they're probably not going to set up bank accounts, but literally what Instinct does is take your Social Security number and set up bank accounts and stuff.

It's moving. I do 99% agree with you, but there's the 1% of me that's like, “Oh, man, it is moving really fast up there.” Let me just ask one more question on the business. I've been reading the earnings calls, obviously, as I've been involved in following this process, and there's 1 really interesting thing, just at a high level, that jumps out.

They kind of blame the accounting and blame different things, but you read the Q2 call, right? They say, “Hey, we're raising our revenue guide—we're going to come in at the high end of our revenue guide—but we're going to come in at the low end of our EBITDA guide.” As you keep reading it, they're talking about how they've got all these businesses that are growing quicker than their overall business, but a lot of the businesses have lower margins.

This is partly influencing the revenue and margin. They've got some things where they're the merchant of record versus a merchant, so they're booking it at a much lower gross margin. I just want to ask you: How do you look at this business when there are a lot of different moving parts and a little bit of accounting complexity? How do you think the business is performing in the here and now?

I think the business is performing completely fine. You still have Treasury growing very nicely on a year-over-year basis, which obviously I think is important. Again, Treasury is the business I'm the most focused on, and that continues to grow. Generally speaking, I'm happy with how things are going.

Everything's relative, right? When you're paying 4 to 5 times free cash flow and you're talking about a business that's still growing free cash flow per share at 10% plus, it's priced for a business that's going out of business, when in reality it's actually generating a ton of cash. Net debt actually does come down quite a bit, so they're paying down debt every single quarter.

8. Leverage and the balance sheet

I think the business is doing quite well, especially given the overall environment and valuation today.

You mentioned net debt, and I think that's the 1 other place people might get hung up on. You also gave the valuation on the Payoneer multiple, and the stock would be more than a double on the Payoneer multiple, so that kind of solves for this. But I think the other thing people might get hung up on is that you look at this balance sheet and there is a lot of debt, right?

9. The 13D that rules out a third party

People might say, “Hey, Zack's doing a free cash flow number, and that's great, but there's a lot of debt in front of that.” Do you want to talk about how you think about the leverage and the financial profile of the company?

I would say their financial profile is very similar to other peers. If you look across the payment space, whether it's Fiserv, Shift4, or Global Payments, they're all at relatively similar net debt-to-EBITDA levels. Given that these are highly recurring-revenue businesses with a very high degree of predictability, they're comfortable carrying a certain debt load.

This is actually the lowest leverage it's had in years. If anything, I would say it's safer today than it was in the past. You can also see that debt is coming down very quickly on a quarterly basis. Again, it's at 3.88 times now, but it's also coming down very rapidly.

10. November 2025: the chairman bids $6.00 to $6.15

Perfect. All right, let's get to the part that really excites me, and that is the event here. I think there's a lot of history. There are things that happen before this that I think are actually important, but the reason you're coming on and the reason I'm so interested is that in November, the CEO, who owns, I think, 56% of the company—I could be off, but he owns the majority of the stock here—offered to take the company private for $6 to $6.15, I think is the number.

That was a huge premium to the prior day's closing price. But Steamboat comes out and says, “Hey, this offer is unacceptable.” I'll toss it over to you. What were you seeing? I do have a rule: If somebody offers a premium for my stock, I'm always interested. What were you seeing, and why do you think the offer isn't in the best interest of minority shareholders, or is too cheap, or whatever language you want to use?

Just to be clear, he made an offer at a premium to the stock price the day before, but it wasn't a premium to the stock price 5 days prior to that.

That's called giving you a softball, right? I'm tossing you the softball. You just have to explain it.

The stock was down over 50%. My suspicion is—and I don't know this for sure—but I would imagine he was frustrated by the share-price performance, which I can understand. I was also frustrated by the share-price performance, and he decided to make an offer above where the current share price was. But I don't think that is a fair offer.

Again, $6 to $6.15 was the offer. I wrote publicly in my letter that the sum of the parts was around $17 a share. A more simplistic multiple analysis gets me to around $19 a share. I was using a very conservative multiple for Treasury Solutions in that sum-of-the-parts analysis.

Again, he made an offer at a premium to a stock price that was significantly dislocated. I don't think the percentage above where the stock was the day before is anywhere near reflective of intrinsic value. I think there are both public-market and recent private-market comps, including Payoneer, that validate that opinion.

11. A bad print, an illiquid stock, and a bid two days later

Could I just back up a little further? What happens is—and again, I want to emphasize that this is a small, illiquid stock—the chairman owns 56% of the company, and board insiders own another 2% or 3%. So, 60% of the company is owned by the board and insiders.

They report earnings on November 5 or something, right? Despite the fact that I thought the earnings were fine—I’m not a payments expert—the stock cratered on the earnings. You can correct me if I’m wrong, but it went from $9 to $5 or something, right?

Seven-ish to $5. Yeah.

Something like that. The next day, or 2 days later, with the stock trading at $5, the chairman put in an offer to buy the company in a 13D for $6 to $6.15—that’s the range he put in. So, if you had a 24-hour view and maybe we’re all mark-to-market, you could say, “Hey, this is a big premium.” If you had any longer view, you would say, “Hey, this is a discount.”

I don’t really think that’s what happened here because, again, the earnings seemed fine to me. I’ve seen companies kitchen-sink and then do a take-private, but this is an illiquid stock. To me, it looks a little bit like—and you might be right; it might be frustration with the stock price trend—but it seems very clearly like an opportunistic bid on an illiquid stock that was down on basically 1 print. I’ll pause there. Is there anything else on the trading dynamics?

Nothing on the trading dynamics itself, but I would just say that when we wrote our public letter, we asked the special committee to conduct an independent and robust review of strategic alternatives and to focus on the intrinsic value of the businesses rather than simply a premium to the stock price.

Since then, the special committee retained Barclays as a financial adviser, which I think is a very strong financial adviser, and Paul Weiss as independent legal counsel. I think the special committee is taking this very seriously, and I think those are important protections. I think fair value is likely to be realized.

12. Ten months in: what takes a process this long?

Let me go to a few other things. The offer was made in November 2025, and I think the special committee retained its advisers in December 2025. You published a letter in November, and we’re in September 2025. It’s been 9 to 10 months. This is a long process. I’ve got a lot of notes on this offer and everything, but I would just ask you: What is going on with a process that runs this long?

There are a variety of things that could be happening. You always have to be careful in speculating. I’ll say my hope is that they’re looking for and running a process for third parties to buy it because, ultimately, I think that would lead to the highest intrinsic value.

The second thing that could be happening is a negotiation between the special committee and Tom, to the extent that he wants to raise a bid. I think there could be a negotiation going on there. There are also just things that happen behind the scenes that we don’t know about.

If I were to speculate, it’s possible the Payoneer transaction, given how recent of a comparable it was, pushed prices up and gave us a recent transaction comparable. Again, this is pure speculation on my part, but to be clear, I think there are very good reasons why Priority is worth more than Payoneer.

The nuance I would point out, and why I think Payoneer deserves a haircut, is because it has much higher stock-based compensation, capital expenditures, and capitalized software, with a very small difference in organic growth. The EBITDA-to-free-cash-flow conversion that Priority has is significantly better than Payoneer’s. If anything, I think it’s pretty clear to me that Priority deserves a premium to Payoneer.

If we were just using the Payoneer price, it would be $12 a share today. I think Priority deserves a significant premium, given its significantly better conversion. People could say, “We don’t have anything recent until that transaction.” Now we have something very recent that points to a much higher stock price, and I think that gives the special committee significant negotiating leverage.

That’s a great point. I hadn’t thought about how a Payoneer transaction in June—let’s call it 6 months after the bid—might have changed the negotiating dynamics or caused everyone to reset.

13. Three earnings calls and not one word on the process

The first thing you mentioned was a third-party bid. The other interesting thing here—and there are a lot of interesting things here—is that the chairman put in his first bid on, let’s call it, November 10. Then, about a month later—I think it was actually December 17—he filed an updated 13D. This was about 5 days after the special committee hired its financial advisers, and it said, “Hey, the special committee asked, and I’m letting them know, I have no interest in selling to a third party.”

This is not uncommon in take-private offers, but I absolutely hate it because it has a real chilling effect. How do you think about the possibility of a third party in light of the chairman, who owns 60% of the company, saying, “I don’t want to sell it to a third party”?

There are a variety of things that could be happening behind the scenes. I want to be careful in speculating, but what I would say is that, based on the way the language was worded, it’s certainly possible for a third party to buy the minority shareholders while the chairman maintains his ownership and rolls it into a private vehicle.

The way I read the language, I certainly think there’s a possibility of the minority shareholders being made whole at a fair valuation, with the chairman still getting to maintain his ownership stake to the extent that he wants to.

14. The January 2025 secondary at $7.75

The company did a secondary offering. I think it was largely selling stockholders, not the company, but the company did one in January 2025, and I think that’s become an interesting data point for a lot of shareholders. Do you want to talk about what that priced at and what the language around that transaction was?

I’m assuming your point is that they were selling stock in early 2025 at more than, or roughly double, the proposed take-private price. At that point, Tom didn’t sell any shares in that offering, implicitly suggesting that he thought it was worth more than where the shares were being sold. I’m assuming that’s what you’re referring to. Is there anything else you want to point out?

This was—and you can correct me if I’m wrong—a secondary offering in January 2025 where a bunch of shareholders sold stock at $7.75, I think, was the price that came out. The language that I heard, and I think one of the letters mentioned this, was that the company said, “The selling stockholders, which includes the chairman, had the opportunity to sell more.” They said, “No, this price is ridiculous. It undervalues us like crazy. We’re not going to sell any more than we have to right now because the price is crazy, and we think the company’s worth much more than that.”

That was communicated—not put in a formal statement, but I thought it was interesting on a host of levels. They did a secondary at $7.75, and now they’re trying to take the company private for $6.10, or $6, or whatever it is. They were communicating that they thought it massively undervalued the company.

Yeah, it makes sense. Sorry, I was thinking about where the stock was actually trading at the time. I think that’s true. I don’t think there’s any doubt that this stock is dramatically undervalued. I think it’s just a question of what will happen in the strategic process. That is ultimately what we’re waiting for.

My point to people listening to this and looking at it for the first time is that you have an incredible risk-reward. In the very worst-case scenario, theoretically, you’re looking at $6 to $6.15 a share, which is roughly 10% upside from here. In the most likely scenario, you’re looking at fair value that is certainly well north of 100% from here.

15. What dragged-out processes usually mean

It’s hard for me to say what a transaction results in, but let’s assume a transaction results in fair value. You’re potentially going to make 100% over the next few months. You’re already very deep in this process. If you’re buying today, you’re getting, on the low side, a 10% return over the next 3 months, and on the high side, a 100%-plus return over the next few months. I think it’s a very attractive risk given that dynamic.

No, look, that’s why I’m involved. I would say the other thing—I was pushing on timing—is that the interesting thing I’ve seen is that this sounds great, but the ones with longer timelines that have really dragged on the longest are the ones where, as an investor, it makes me pull my hair out. I’m thinking, “What the fuck is going on? Do these guys have any clue what’s happening? Do they have any clue what it’s doing?”

But the ones that have dragged out, I’ve personally noticed that, for the most part, it’s because the process is actually pretty serious and there are real negotiations going back and forth between the parties. There’s something going on behind the scenes. I can think of situations where I think that ultimately worked out for shareholders, but I think shareholders would have gotten an even bigger premium if they had pulled the trigger earlier.

But I'd point to something like Kellanova got taken out recently, and that took a little while and came out at a pretty big premium. There have been several others, but I think people look here and say, “Oh, there's been no update. Nothing's happening.” I don't think anything could be further from the truth. I think there's real negotiation and real work getting done.

If I can ramble for a second, I would point to their adjusted EBITDA number. They add back the legal costs of the special committee, and in Q2 it was around $3 million. If you look at the year-over-year delta, $3 million for a process in 3 months—you generally get paid as a bank through a success fee, and $3 million is a big, big increase. I would suggest that the negotiations are hot and heavy if they're running that big a bill. I rambled a lot there, so I'm happy to toss it over to you if you have any thoughts on that.

Yeah, I think, like I said before, the most likely reason for taking this long is potentially something like the Payoneer transaction just creating a very recent comparable and that leading to further negotiations. I think the other thing is that they're just running a robust process, and sometimes robust processes take a fair amount of time.

I don't think this is—I think this is on the long side of a typical process, but I don't think it's by any means unusual relative to processes that I've watched over time. Some of those processes result in transactions, and some don't. I can't say with absolute certainty that a transaction will occur here, but certainly I don't think the amount of time that's transpired means that a transaction won't occur.

Do you think Priority would be an attractive strategic acquisition target to a strategic acquirer?

Absolutely.

For anyone, really. Think of a private-equity firm or a strategic. That treasury solutions business is a gem. It's an incredible business. I agree on the private-equity firm, but I mentioned a strategic because I could see one scenario happening where the CEO says, “I'm not selling to anyone.” The company runs a full and fair process, and they're sitting there, and the CEO has bumped his bid up to $8.

There's a strategic at $12 or $15, whatever number you want to choose. The tension is that the special committee can't sell without the CEO's blessing. The special committee is saying, “We've got this massive premium bid. You need to get your bid up. We could sell to you at $11 if there's a strategic at $12, but you say we won't do it with anyone else if you're at $9. We can't do that.”

You also need to look yourself in the mirror and say, “Why do I want to take this private for $9 when there's a strategic who should pay the highest bid at $12? Shouldn't I just go engage with the strategic and sell?” I could see something like that happening here. I agree with you that this is a very strategic asset, and the history of payments suggests that there are always 3 strategic bidders who want to buy you, rip out your SG&A, and realize huge synergies, because the synergies to these deals are massive.

Yeah. There are a ton of comparable transactions. Prior to the payments SaaS apocalypse, it used to be 13 to 15 times NTM EBITDA. Now we're talking 8 to 9 times, and we're still getting huge upside. I think 8 to 9 times is probably the floor of where a transaction should occur for this, and I could easily see it happening much higher. Again, 8 to 9 times is a $12 stock or higher.

The other interesting thing here is that I've followed a lot of these, and most of them will open up their earnings calls, right? They'll say, “Hey, we know everybody wants an update on the strategic process. We can't update it.” If it's a CEO trying to do a take-private, they'll say it's in the hands of a special committee. If it's just a general company that's announced a strategic review, they'll say, “Hey, we won't share any news.”

The company hasn't even acknowledged the strategic process. There have been 3 earnings calls—Q4, Q1, and Q2—and they haven't even mentioned the strategic process in any of the calls, except to say that there were increased add-backs from the strategic process. The very last question in the most recent earnings call was from an analyst. I can't remember what bank it was from, but he was saying, “Hey, all investors really care about is the strategic process, this special committee, and you guys haven't talked about it in 9 months. Can we get an update? Can you guys do something?”

They didn't cut him off, but they didn't respond, and they ended the call after that. What do you make of that? It's just very weird to me.

Yeah, look, I think it's the appropriate thing to do. I think it's uncomfortable, and I understand why people don't like it, but I think there is absolutely a robust process happening behind the scenes. You can either say nothing, or you can get on and say, “We can't comment on the strategic review.” There's not really a big difference between the two. It's either “We can't comment” or you just say nothing, and either way, it's saying nothing.

I think from a legal standpoint, they're doing the right things. I appreciate the fact that they're still holding conference calls. Some companies don't hold conference calls during strategic review processes for that exact reason. I appreciate the fact that they are at least holding conference calls during the strategic review, and I respect their reasoning and their thought process in not commenting.

I can also empathize with the shareholder base that's frustrated and wants to hear something. As soon as they have something that's finalized and they can communicate, I'm sure they'll be communicating with us, and at that point we'll get to evaluate what they've decided.

16. How the earnings decks changed after the bid

No, you make some great points, because I am with you. One of the things that sucks is when a company goes into a strategic review and then they black out, and you're like, “Hey, I'm a shareholder, and this is not an easy business to understand. There are a lot of numbers and a lot of moving parts. If you're not giving any commentary to me, you've turned this into a black box.”

Now I don't know if, say, you announced a deal at $8, I'd probably be happy on a mark-to-market basis, but I don't know if that undervalues or overvalues the company at that point. I think you're right: it's nice that they continue doing calls.

You're probably right that just saying nothing is the best thing, because I've done these before, and every word that you say when you're in a special committee gets reviewed. I remember one time, one company had ended every earnings call saying, “We can't wait to talk to you next quarter.” They were in a strategic review, and then they didn't say that. I had a few friends who were like, “Oh my God, the deal is coming. They're winking to us that there's a deal coming.” The deal did not come, but everything gets read.

The other interesting thing here is that I always worry—and this is one of the reasons a lot of companies take earnings calls off, especially when the CEO bids for the company—that they're going to start kitchen-sinking things, so that shareholders are happy to get rid of the business.

And it is interesting if you review their earnings slides, how their earnings have evolved from before the process to after the process. Q3 2025 is the last earnings report they do before they make the bid.

They have taken away a few slides. It does feel like they're talking it down a little bit, and I would just point out—

They used to do a recent business-wins update slide. They haven't done that since they announced the earnings call. They used to highlight this thing that said, “Hey, we're continuing to shift to the higher-value segments,” and they would talk about how their business is moving over there. So it's getting better business and better margins.

They dropped that. They also used to have a financial guidance slide that said, “Hey, here's our financial guidance,” and broke it down. They dropped that. They still guide, but I thought it was interesting that they started pulling down a lot of the KPIs. I don't know if there's any fire there. I don't know if there's any smoke there, but I thought it was worth noting.

Yeah. Again, I want to be careful to speculate on things that I just don't know. What I would reiterate is that I feel very comfortable and confident that there are independent directors on the special committee who are being advised by very good financial advisers who have advised on other similar payments transactions and know the industry, the space, and valuations very well.

I'm confident there are a ton of comparable transactions for this business. It's not like there are 1 or 2 comparable transactions. There are a lot of recent comparables, and there are a lot of comparables over the past 10 years. They all point to massive premiums to where the stock is today.

The opportunity, from my perspective, for anyone looking at this for the first time is that, on the low end, you have a bid that's currently, I think, completely disconnected from intrinsic value but still 10% higher than where the stock is today. At the high end, you have a prospective takeout that could be north of 100% from here.

And then theoretically, if this were to stay public, you have a stock that is extremely dislocated and probably doubles in a relatively short period of time as it should reach intrinsic value, as people start to follow the story more and really think through the segmentation.

17. Tuck-in M&A, cash building, and the standalone case

Yeah. And the other interesting thing is, again, I get all obsessed with the event process, but it has been business as usual for the company, right? They recently announced a small tuck-in acquisition. When you've got a payments company like this, the reason strategics love to buy these is that the SG&A savings and the synergies are just massive.

They just did a little tuck-in acquisition. The business has performed well, to my eyes. I mean, you went through it, but it's growing and generating a lot of cash. The cash is building up on the balance sheet as they wait for the special committee's strategic process to get done.

But if they don't reach a deal, this is a business that is performing well. All of a sudden, the $50 million or so of cash that they've generated so far this year can go toward paying down debt, or they could do a share repurchase. They have done very tiny share repurchases in the past.

So I think there's a lot of optionality on the back end, given how the business is performing here.

Yeah. I just don't think there's any business out there I can point to where you have high recurring revenue, high barriers to entry, strong growth, and it's trading at less than 5 times free cash flow—true free cash flow, not an adjusted number with a lot of stock-based compensation, but an actual true free cash flow number.

I think it's just extremely rare in the public and private markets. I think it's an incredible deal here, and I think that will get realized one way or the other, whether it's through a private transaction or whether the stock stays public.

18. What a fair number actually looks like

Perfect. Well, I hope it is through a private transaction. I hope it is through one sooner rather than later, and I hope it is at a massive premium because, honestly, if it was at 10 times, I think they would be getting a steal. That's just so far above the current price, it's laughable.

But this is a levered entity that's performing well. There are synergies to taking this private. This is, what, a $600 million or $700 million market cap, something like that? Maybe I'm a little off, but you probably save $4 million to $5 million in public-company costs. The CEO already owns 60% of this, so you say, “Hey, I write a $200 million or $300 million check, I own this whole business at a really interesting multiple, and by the way, I save $4 million in public-company costs per year.” $4 million on $200 million is a pretty solid return right off the bat.

Anyway, anything we should be talking about or thinking about with priorities?

Again, I would really just encourage people to go look at the various segments of the business. Really spend time understanding Treasury Solutions, because that is just a really incredible business, I think.

Spend time looking through all the different M&A transactions. You have a lot of recent ones: Worldpay, AvidXchange, Nuvei, Payoneer—there are a ton of different examples.

I think if you spend time looking at the quality of the business and the amount of private comps that are out there, you can get really comfortable that this is just an incredible risk-reward here. I think there is very limited downside over a long period of time and really significant upside, and potentially you're going to realize that in the very near term.

So I think it's really exciting from a risk-reward standpoint today and super attractive.

Perfect. Well, hey, thanks for coming on. Thank you for sending the letter to the board, because I think one thing people underestimate is that when you're in these special processes, letting the special committee know, “Hey, this price is way too cheap,” gives them something to stand on and something to point to. Having a shareholder say that and giving them some direction, I think, is actually really helpful.

So thank you for your work there and for publishing that. I'm looking forward to having you on again in the near future.

Yeah, absolutely. Thanks so much for having me on. I appreciate it.