When Francisco Partners invested an undisclosed sum in Paymetric, which automates B2B payment workflows within enterprise systems, in August 2013, the company’s two previous venture capital owners had held the company for about 10 years and invested through multiple rounds of funding.
Austin Ventures and Palomar Ventures had nearly written down the business, which was seen as a sideway start-up that had done OK but not brilliantly, and were pleased when Francisco Partners emerged as a buyer.
Armed with a plan to take advantage of ramping demand from enterprise-levels merchants for payment systems, Francisco Partners aimed to bring the company to its next stage of growth and it implemented significant change in the subsequent four years.
“We saw huge opportunities at Paymetric given its deeply integrated solution, high-quality customer base and mission critical capabilities but it required a great management team to work with us to capitalise on them,” says Peter Christodoulo, a partner at Francisco Partners.
“Chief executive officer Asif Ramji, chief financial officer Gil Friedman, senior vice-president of sales and business development Cam Balash and the whole team worked with us tirelessly to build out sales and marketing, expand our footprint at large customers, launch new product modules, make a small but strategic acquisition and further harden the platform.”
In four years, Francisco Partners increased annual revenue from $19 million in 2013 to an estimated $57 million in 2017. It grew annual EBITDA from $2 million in 2013 to estimated $27 million in 2017.
“Growth in revenue and EBITDA is extremely impressive”
This was done in part by diversifying the company’s product offering from two primary product modules to 11 and by expanding compatibility with additional enterprise resource planning systems beyond the initial exclusive compatibility with SAP.
“Growth in revenue and EBITDA is extremely impressive,” says Steven Kaplan, a professor at University of Chicago Booth and one of the judges. “Paymetric required real change.”
Growth also came from geographical expansion, mainly by having existing clients increasingly use Paymetric products from their overseas subsidiaries.
Meanwhile, headcount grew by more than 80 percent to 135 when Francisco Partners exited, and some keys positions were added, including a new CFO and a new head of research of development. “Peter Christodoulo and the team at Francisco Partners provided Paymetric with valuable operational insight, support and best practices, which helped us scale the company and drive exponential growth,” says Ramji.
Ultimately, Francisco Partners sold the Atlanta-based company to Vantiv, a deal announced in April. Francisco Partners declined to disclose returns, but it was reported at the time that Vantiv paid $525 million, making Francisco Partners more than 5x its money.
The deal clearly impressed our judges, including Joncarlo Mark, founder of Upwelling Capital Group, who called it a “home-run exit”.
Large-cap: The Carlyle Group – Vogue International
Upper mid-market: Cerberus Capital Management – Bowlmor AMF
Lower mid-market: Francisco Partners – Paymetric
Small-cap: The Riverside Company – YourMembership
Upper mid-market: ShawKwei & Partners – YongLe Tape
Lower mid-market: Advantage Partners – Hisense Broadband Multimedia Technologies*
Small-cap: Mekong Capital – Mobile World
*Hisense is not included in the write-ups due to confidentiality issues