SumUp, a UK-based payments and financial services provider for merchants, is on the lookout for acquisitions and has a strong pipeline of potential deals, CFO Marc-Alexander Christ told Mergermarket.
The London-based company, which is backed by Bain Capital, has an internal M&A team scouting and speaking with possible target companies generating at least EUR 50m in annual revenues, Christ said.
SumUp, which generated more than EUR 200m revenue in 2020, is targeting founder-led businesses that cater to small merchants, including offline and online payments providers, software-as-a-service (SaaS) invoicing and accounting solutions, and lenders with strong portfolios, he said.
The company could also target digital banks, although they can be “slightly pricey”, Christ said. It prefers the targets’ founders to remain on board following transactions, he said.
SumUp, which has more than four million merchant users and 3,000 employees, also considers exploring M&A to enter new markets, Christ said. It works in 35 different countries throughout Europe and the Americas and aims to expand into 3-5 new ones every year, he added.
The business is well-positioned to pursue acquisitions following the Bain Capital-led EUR 590m funding round it announced in June, he said. The round, which was split evenly between equity and debt, valued the company at EUR 8bn, he said, also saw contributions from Blackrock, Centerbridge and Crestline, among others, per media reports.
Asked whether he expects to close an acquisition by year-end, Christ said that the market is “quiet” at the moment because the economic conditions make it difficult for parties to agree on pricing, but that he expects activity to pick up over the next couple of months.
SumUp is receptive to pitches from advisors with potential M&A opportunities, he said, noting that it has established relationships with large international banks.
The company has made ten M&A deals since its 2012 launch, including its USD 317m, October acquisition of San Francisco-based marketing and loyalty platform Fivestars, Christ said. Other notable deals include the 2016 merger with Germany’s Payleven and last year’s purchase of France-based Tiller, he said.
SumUp, which raised EUR 750m in debt financing last year, also grew by 50% year on year, he said.
While the business would like to go public eventually, any IPO is still “far away”, Christ said. The company plans to continue growing privately and feels “no pressure” to prepare an IPO at this stage given its strong access to both debt and equity funding, he said.
Market conditions will dictate the timeline of SumUp’s next fundraise, he said. It is “very close” to reaching profitability and so does not need to raise additional capital to operate, he added.
SumUp provides small and mid-sized merchants, including coffee shops, restaurants and individual service providers, with point-of-sale payment solutions via its proprietary card reader, Christ said. It also offers financial services like banking and lending, marketing, and invoicing and accounting tools via its SaaS platform, he said.
Goldman Sachs’ London team advised the company on its latest funding round, with legal counsel provided by Weil, Gotshal & Manges, he added.
