Brisbane entrepreneur Michael Dempsey says he will soon be joining the ranks of the unemployed. But don't shed too many tears for him – after selling his payment solutions business Ezidebit to US-based Global Payments for $305 million, Mr Dempsey will walk away with $150 million.
The deal was first revealed by the Australian Financial Review's Street Talk on Tuesday.
Ezidebit helps small businesses improve their cash flow by taking the hassle and upfront cost out of setting up and maintaining secure recurring direct debits, BPAY or credit card payments with customers.
It hired Deutsche Bank and Macquarie Capital to manage a float in July, hoping to strike a chord with investors looking for growth companies in the tech sector. But Mr Dempsey said it had also been courting numerous companies and Global Payments made a good offer.
"We have been tossing up whether to list or do a trade sale. It is a fair price for both sides," he said. "We have been growing at about 30 per cent compound annual growth rate – we spin off a lot of cash."
The company is more than 50 per cent owned by Mr Dempsey, who founded the business in 1999 and has been chairman of Ezidebit since 2008. Another 20 per cent is owned by the Dempsey family, which also owns Brisbane's The Normanby Hotel .
Mr Dempsey saw a need for such a business when he struggled to get paid on time while running childcare centres.
It now handles $3.5 billion worth of payments for 16,000 businesses across Australia and New Zealand, and has 130 staff across the two countries. It recently opened an office in Hong Kong.
Like most other payment providers, the company makes its money from a combination of percentage-based and flat transaction fees. These are charged to businesses on top of the merchant fees levied by the underlying payment method such as direct debit, BPAY or credit card.
Mr Dempsey said it was essentially taking the "raw" payment method and "wrapping it up in a cloud-based solution", packaged in existing software.
Its software is embedded in up to a hundred different packages that companies use, including MYOB. It also tailors its software for big companies.
While they did not guarantee businesses would be paid on time, Mr Dempsey said their clients got paid within the contracted period about 95 per cent of the time.
The company also plans a debt-collection service.
Mr Dempsey said Global Payments would have the wherewithal to roll out Ezidebit across Asia, where it has just got a toehold with its entry into Hong Kong.
"Global Payments is a multinational business, they can take us to the next level and accelerate our growth," he said.
But he will have a role only as an adviser once the sale is completed some time before the end of November.
"I haven't really thought about [what's next]," he said. "I will be an adviser, but I will be unemployed."
Global Payments chief executive Jeffrey Sloan said they had bought Ezidebit because it "aligns well with our worldwide strategy to enter new, attractive payments markets and supports our growth initiatives with a technology-based, direct distribution player".
The Atlanta-based Global Payments expects to complete the takeover during the second quarter of its 2015 financial year, which runs to the end of November, after it gets regulatory approval in Australia.
It expects Ezidebit to add about $US25 million to its forecast revenue for next year of between $US2.69 billion and $US2.76 billion.
