M&A Advisory Solutions
Maximize the Value of Programs and Assets: Mergers & Acquisitions
The Kessler Group specializes in negotiating Mergers & Acquisitions deals involving consumer and business credit portfolios of all types; including those with endorsements, such as banks and credit unions, travel and entertainment companies, retailers, professional associations and special interest and cause-related groups.
Opportunities for Improved Performance
Over time, endorsed program partnerships may be candidates for review in light of changing market conditions and evolving business ambitions. The Mergers & Acquisitions practice collaborates with both partner groups and issuers in the pursuit of optimal program and portfolio performance.
With more than 20 years of experience advising partners and negotiating over 500 portfolio transactions representing over $80 billion in assets, we have become the industry leader in brokering mutually rewarding resolutions that maximize the value of portfolio assets for all parties involved.
Advisory Services Include:
- Program Optimization Analysis
- Partner Selection Process & Execution
- Contract Negotiations / Restructures
- Program Transition Strategies & Execution
- Issuer Re-entry Strategies
Transactional Services Include:
- Portfolio Valuation & Analysis
- Portfolio Due Diligence
- Purchase & Sale Agreement Negotiations
- Interim Servicing Agreement Negotiations
- Agent Credit Card Partnerships
- Merchant Advisory Services
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A national US retailer with three top brands was in a long-term but contentious relationship with a global financial services firm. The private-label and co-brand credit card programs were an integral part of the retailer’s sales and retention strategies, and its credit card programs could not be compromised.
The financial services firm entered into the partnership with the retailer with the aspiration of investing and growing its retail partner relationships. Without having the scale and expertise to support the retailer’s private-label and co-brand programs, the financial services firm continued to lose more and more money with each card issued.
In late 2010, the retailer and the financial services firm agreed to explore alternatives despite having a long-term partnership contract in force.
- Kessler developed a solution that would allow for the transfer of the retailer’s programs to a new issuing partner better able to serve the marketing, customer service and financial needs of the retailer
- Kessler helped solve the financial dilemma facing the financial services firm and the retailer by establishing amicable break-up terms for both parties that gave the retailer the ability to form a new partnership with a more retail-focused issuing bank with aligned interests and goals
- Kessler was able to create a timely and seamless transition for the retailer partner within 180 days
- The retailer entered into a new long-term partnership with the new issuer
A national retailer was dissatisfied with its private-label card issuer and ran an RFP process. Due to the deterioration in the relationship between the existing issuer and the retailer, the two parties could not reach agreement on conveying the existing portfolio to the new issuer.
The existing issuer believed it had leverage on termination contract language and that the retailer owed the issuer several hundred million dollars. The retailer vehemently disagreed and believed that the issuer, in fact, owed a significant sum on unpaid customer mailings and operating expenses.
After many months of tense negotiations, the existing issuer, the retailer and the new issuer brought Kessler into the process, in the hope of finding a solution that would satisfy all parties and avoid litigation.
- Kessler worked with each party to understand all the open items and what was most important to each party and then was able to create a solution that was agreeable to all three parties. Kessler’s solution resolved all financial and contractual disputes between the old issuer and the retailer
- In addition, Kessler developed a new partnership between the old issuer and the retailer (unrelated to the retailer’s private-label program) that strengthens the issuer’s rewards program and drives traffic into the retailer’s stores
- Kessler was able to create a timely and seamless solution that ensured conveyance of the existing card portfolio to the new issuer when the old contract ended and the new contract began
- The end result was a win-win for all parties, creating incremental value for all. It also allowed the old issuer and the retailer to re-establish a positive relationship dynamic instead of parting ways on bad terms
A global financial services firm was looking to exit Canada, which it considered nonstrategic.
It had a long-term contract in force with multiple years remaining with a Canadian retailer, and the relationship was amicable and profitable for both parties.
- Aware of the financial services firm’s strategic intent and the growth aspirations of another issuer that needed a private-label credit card platform in Canada, Kessler saw the opportunity for a win-win for all parties and approached the financial services firm with a potential solution
- Kessler introduced the new issuing bank partner, and all parties agreed to work exclusively for a 60-day period to develop financial and business terms for the sale of $1.4 billion in private-label and co-brand credit card assets and the transfer of the long-term contract to the new issuer
- Kessler developed a solution in which the new issuer acquired the systems/infrastructure necessary to create a seamless transition for the Canadian retailer and allowed the financial services firm to make a clean break from its Canadian credit card business
- Kessler was able to create a timely and seamless transition for the Canadian retailer within 180 days and helped create a more robust relationship with the new issuer
- The existing contract was assigned to the new issuer under the existing terms and service levels for the remaining years of the contract
A large US entertainment co-brand program was approaching termination with a large national credit card issuer in the midst of a down credit cycle and high losses. The existing issuer did not have a desire to extend or renew the agreement with the retailer.
In the marketplace, there was no appetite among issuers to acquire a large program with a $1 billion portfolio and underperforming segments. The retailer was in a precarious situation as termination was approaching, and it would be forced to leave its customers behind and launch a de novo program.
- Kessler worked with the incumbent issuer and the retailer to segment the portfolio by customer usage to increase value and attractiveness to a new issuing partner
- Kessler was able to generate interest in the market and matched a new issuer with the retailer, which then acquired the lion’s share of the co-brand portfolio and the majority of the retailer’s most loyal customers
- A flourishing new partnership was created, and the co-brand customers continue to enjoy the benefits from the improved electronics/entertainment co-brand rewards program
- Both parties were satisfied with the outcome
A large US affinity player and a large national credit card issuer had a very troubled partnership, and both sides were initially resigned to run out their contract with limited to no interaction.
Due to the deterioration in their relationship, neither party would budge regarding contractual concessions to help reinvigorate the partnership.
Based on the existing contract language and current financial pressures, the card issuer was not in a position to give up and/or assign its program to another issuer.
- Kessler worked with both parties to understand all the open items and what was most important to each party, creating a solution that was agreeable to both parties
- Kessler persuaded both sides to reinvent the partnership with new products and new people to support the partnership
- The partnership is back on track with a reinvigorated value proposition and engaged personnel from both sides to profitably grow the business
- Today senior management is engaged from both sides, and they are expanding the product set even outside of the card space