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Braintree Is On The Block, Had Acquisition Talks With Square And PayPal

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Re: Braintree Is On The Block, Had Acquisition Talks With Square And PayPal

#11

Post by bhauer »

cesarpereira wrote: post #5
kloncks wrote: post #2

Is it good or bad for BrainTree that this news is now public?

Both (leaning more heavily towards bad) Bad: Paypal as a potential suitor will make some existing and potential customers very nervous and that won't be good for customer acquisition. Other potential suitors may see other heavyweights passing on the deal as a negative. Good: The attention may increase the pool of suitors.

I would agree with the "bad" assessment. If I had accounts at BrainTree, I would be very worried about PayPal as a suitor. Ostensibly a fair percentage elected to use BrainTree because there were Not PayPal. I presently steer clients away from PayPal, and had previously recommended BrainTree. This casts doubt on that going forward.

This would be similar to Oracle acquiring MySQL.

Re: Braintree Is On The Block, Had Acquisition Talks With Square And PayPal

#12

Post by pedalpete »

kloncks wrote: post #4
nonchalance wrote: post #3

Earlier quoted context omitted.

> More recently, it had been in acquisition talks with Square, which also fell through, possibly because Braintree is asking for too high a valuation. > According to industry sources, Braintree has been asking for $1 billion, which seems unrealistic. It would seem that other suitors are trying to pressure Braintree to lower their target

Square processes $10b. BrainTree processes $10b. How is Square valued at $4b and BrainTree can't sell for $1b?

Isn't valuation is based on not only current revenue and business model but also forecasts and potential?

Square has a bit of a different opportunity than BrainTree as they are focusing on simplifying a real-world payments platform vs online and mobile payments. There seems to be less competition and a larger market for Square vs. Braintree I think.

Re: Braintree Is On The Block, Had Acquisition Talks With Square And PayPal

#13

Post by jfarmer »

kloncks wrote: post #4
nonchalance wrote: post #3

Earlier quoted context omitted.

> More recently, it had been in acquisition talks with Square, which also fell through, possibly because Braintree is asking for too high a valuation. > According to industry sources, Braintree has been asking for $1 billion, which seems unrealistic. It would seem that other suitors are trying to pressure Braintree to lower their target

Square processes $10b. BrainTree processes $10b. How is Square valued at $4b and BrainTree can't sell for $1b?

What are the first and second derivatives of those numbers with respect to time?

Re: Braintree Is On The Block, Had Acquisition Talks With Square And PayPal

#14

Post by tomkarlo »

kloncks wrote: post #4
nonchalance wrote: post #3

Earlier quoted context omitted.

> More recently, it had been in acquisition talks with Square, which also fell through, possibly because Braintree is asking for too high a valuation. > According to industry sources, Braintree has been asking for $1 billion, which seems unrealistic. It would seem that other suitors are trying to pressure Braintree to lower their target

Square processes $10b. BrainTree processes $10b. How is Square valued at $4b and BrainTree can't sell for $1b?

Valuation is based on growth and expected future profit more than current revenue or processing volume. If two companies both process $10bn, but one makes 3% and is growing 25% YoY while the other makes 1% and is growing 5%, they should have radically different valuations.

Re: Braintree Is On The Block, Had Acquisition Talks With Square And PayPal

#15

Post by kintamanimatt »

This acquisition culture is almost always bad for customers. Imagine what PayPal would do to Braintree if they acquired them. PayPal can't even manage their own risk without pissing customers off. I can only imagine they'd slowly turn Braintree into a braindead company that's nothing but a shell of its former self.

I sincerely hope Braintree finds a way to keep its independence and continues standing on its own. We need a degree of competition and fragmentation in all industries so these companies keep up the pace of innovation.

Every time I hear of a company being acquired, it feels like it's only a matter of time before the company is gutted or killed. It seems rare that everyone has their happy ending when it comes to acquisitions.

Re: Braintree Is On The Block, Had Acquisition Talks With Square And PayPal

#16

Post by pbreit »

callmeed wrote: post #10
cesarpereira wrote: post #5

Earlier quoted context omitted.

Both (leaning more heavily towards bad) Bad: Paypal as a potential suitor will make some existing and potential customers very nervous and that won't be good for customer acquisition. Other potential suitors may see other heavyweights passing on the deal as a negative. Good: The attention may increase the pool of suitors.

Exactly. We process over $1M a year with Braintree (that's why I posted this article). In my opinion, PayPal is the worst possible scenario short of Braintree shutting down. The thought of forcing thousands of customers to re-enter billing information makes me throw up in my mouth a little.

Why do you think that would be the case? That did not happen with Payflow and PayPal mgmt is quite a bit better now (the CEO mainly).

Re: Braintree Is On The Block, Had Acquisition Talks With Square And PayPal

#17

Post by cicloid »

callmeed wrote: post #10
cesarpereira wrote: post #5

Earlier quoted context omitted.

Both (leaning more heavily towards bad) Bad: Paypal as a potential suitor will make some existing and potential customers very nervous and that won't be good for customer acquisition. Other potential suitors may see other heavyweights passing on the deal as a negative. Good: The attention may increase the pool of suitors.

Exactly. We process over $1M a year with Braintree (that's why I posted this article). In my opinion, PayPal is the worst possible scenario short of Braintree shutting down. The thought of forcing thousands of customers to re-enter billing information makes me throw up in my mouth a little.

Isn't supposed to be easy to move the card details from the vault to other provider?

Re: Braintree Is On The Block, Had Acquisition Talks With Square And PayPal

#18

Post by ajsharp »

Anyone building a card processing business is going to have trouble finding long-term cash flow because the margins are razor thin. For example, Visa processed $6.7 trillion in transactions and made $10.4bn in revenue.

I'd rather do business with someone like Balanced, who has a larger product vision than "well paypal sucks".

Re: Braintree Is On The Block, Had Acquisition Talks With Square And PayPal

#19

Post by cperciva »

ajsharp wrote: post #18

Anyone building a card processing business is going to have trouble finding long-term cash flow because the margins are razor thin. For example, Visa processed $6.7 trillion in transactions and made $10.4bn in revenue . I'd rather do business with someone like Balanced, who has a larger product vision than "well paypal sucks".

the margins are razor thin. For example, Visa processed $6.7 trillion in transactions and made $3bn in revenue.

I don't care how thin the margins are, I'd love to have $3B of revenue.

Re: Braintree Is On The Block, Had Acquisition Talks With Square And PayPal

#20

Post by CoachRufus87 »

kintamanimatt wrote: post #15

This acquisition culture is almost always bad for customers. Imagine what PayPal would do to Braintree if they acquired them. PayPal can't even manage their own risk without pissing customers off. I can only imagine they'd slowly turn Braintree into a braindead company that's nothing but a shell of its former self. I sincerely hope Braintree finds a way to keep its independence and continues standing on its own. We n…

Most companies lose their independence once they take outside funding. Those investors need to see a return on their investment somehow.
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