How Elite Investors Are Boosting Portfolio Valuations
Everyone obsesses over EBITDA expansion through the usual suspects: revenue growth, operational efficiencies, and streamlined procurement.
But here’s what the legacy financial playbooks won’t tell you:
While you’re fixated on revenue growth and traditional cost-cutting measures, payment processors are silently siphoning 3% straight off your portfolio companies’ top line.
And the worst part? They’re counting on you not noticing. Or making it impossible to switch.
The $2.5M valuation boost nobody’s talking about
In the high-stakes world of private equity (PE) and venture capital (VC), where every basis point of EBITDA can translate to millions in valuation, looking past inflated payment fees is expensive.
We’ll play it straight with you: this is where we come in.
A portfolio company generating $50M in revenue that implements VeriFee can unlock $250K+ in annual cost savings. At a 10x EBITDA multiple, that’s a $2.5M valuation increase without changing a single operational parameter. That’s right. No vendor changes. No software modifications. No disruption or resources required whatsoever.
Just pure, unadulterated EBITDA expansion that adds straight to your valuation multiple.
And that’s just the beginning. The timing couldn’t be more critical for savvy investors.
The M&A landscape has changed. Has your playbook?
Let’s be real for a moment. The days of reliable multiple expansion are gone. Market-driven valuation jumps aren’t the slam dunk they once were––this isn’t 2021 anymore.
Recent data shows 86% of North American PE firms have shifted their primary focus to EBITDA-driven value creation. Yet a shocking 70% of M&A deals overestimate synergies, and only 10% meet their cost synergy targets.
Smart money is looking beyond traditional cost-cutting measures toward what we call “frictionless optimizations”––cost reductions that require minimal effort but deliver outsized returns.
Payment processing optimization sits at the absolute peak of this efficiency curve. And there’s one big reason why:
The payment industry stacks the deck against you
The payment processing ecosystem is deliberately engineered to be inscrutable. Monthly statements are impenetrable. Fee structures can change without warning. Pricing models are purposely complex. Billing terminology is misleading––with made-up names that feel like requirements:
Regulatory compliance fees. Security fees. Card brand-related fees.
It’s all just different flavors of the same strategy: complexity as camouflage to induce complacency.
And it works.
Add to that embedded payments that remove free market choice, crafty cancellation clauses and payment and customer data being held hostage.
Most CFOs have better things to do than decode these Byzantine statements.
Most CEOs trust that their teams have secured reasonable rates.
And most PE operating partners are focused on bigger, more visible cost centers.
This collective blind spot costs portfolio companies millions every year. Millions that could be contributing straight to EBITDA.
Processors are banking on this confusion.
And they’ve been getting away with it for decades.
But now we have the math to prove exactly what this is costing you. Let’s look at the hard numbers.
Beyond the spreadsheet
Consider this real-world scenario:
A PE-backed healthcare company with $75M in annual revenue leverages VeriFee to optimize payment processing costs by a modest 0.5% of revenue.
The result?
- $375,000 in immediate annual cost savings
- $3.75M in added valuation (at a 10x multiple)
- Zero operational disruption
- No vendor or banking relationship changes
That’s right. Nearly $4M in added enterprise value from a single optimization that required zero operational changes.
For an even clearer illustration of the impact:
A company with $100M in revenue typically pays around 2% ($2M annually) in payment processing fees.
VeriFee delivers 0.5% in savings ($500K annually), creating a $5M valuation impact at a 10x multiple––all without changing a single thing about operations.
For sophisticated funds, this translates directly to measurable IRR improvements.
A 5-year hold with an incremental $500K in annual EBITDA? That’s 60-80 basis points to deal-level IRR––potentially unlocking millions in additional carry without deploying a single hour of operational consulting.
And if you’re running a roll-up strategy?
The math becomes even more compelling. Standardizing cost reductions across multiple portfolio companies can unlock millions in additional value that would otherwise be quietly skimmed away by payment processors who rely on obscurity and complexity to maintain their margins.
The opportunity is clear. But executing on it requires specialized expertise and insider knowledge.
The three-step process
smart investors are implementing
The most sophisticated PE firms aren’t waiting. They’re integrating payment processing optimization into their standard post-acquisition playbook. Here’s what actually happens:
- Immediate post-close analysis
Within days of closing, run a payment processing audit. (This isn’t about blaming the previous team––it’s about finding money that’s 100% being left on the table.) - Zero-disruption implementation
Unlike typical cost-cutting, this requires no staff changes, no vendor switches, no operational disruptions. It’s pure financial optimization that’s invisible to literally everyone except your returns. - Portfolio-wide rollout
Once it works for one company (it will), investors immediately roll it out across their entire portfolio. The math is simple: 0.5% EBITDA improvement × number of portfolio companies × multiple = massive fund-level impact.
What makes this so powerful? Asymmetric risk-reward. Zero downside. Minimal implementation effort. Substantial and immediate upside.
And this strategy isn’t just for new acquisitions.
Exit amplification
Implementing payment processing optimization 12-24 months pre-exit is particularly potent. That annual cost reduction compounds: it offsets banking fees, increases proceeds, and signals operational discipline to buyers.
In markets where every EBITDA basis point is scrutinized, this creates an immediate competitive advantage during exit.
The window of opportunity won’t stay open forever
With M&A activity projected to surge in 2025 following strong transaction momentum in H2 2024, forward-thinking investors are establishing these optimization frameworks before competition intensifies.
The best-performing acquirers capture 50% of synergies within the first year, with 98% realized by year three.
By integrating VeriFee into financial due diligence and post-acquisition operational improvements now, investors can capture untapped value while their competitors remain fixated on traditional—and increasingly less effective—value creation levers.
Given that 50-70% of M&A transactions fail to achieve their synergy targets, firms that incorporate VeriFee into their value creation playbook secure a competitive edge by realizing cost synergies faster and more predictably than their peers.
What VeriFee does differently
Unlike typical advisories, VeriFee doesn’t just identify problems––we solve them. Our approach is fundamentally different:
- We conduct a thorough analysis of your current payment processing statements, using proprietary AI to decode even the most obscure fee structures.
- We negotiate directly with your existing processors, leveraging our industry expertise and data-driven insights to secure better terms––without changing your existing relationships or systems.
- We monitor your statements ongoing to ensure that the negotiated savings don’t mysteriously disappear over time (a common industry practice).
- We only get paid based on actual savings delivered. No savings, no fee. It’s that simple.
This gain-share model ensures perfect alignment between our interests and yours. We’re not interested in charging consulting fees for theoretical savings. We get paid when—and only when—real dollars hit your bottom line.
This isn’t just optimization––it’s arbitrage against industry opacity.
What this means for your actual strategy
For Buy-Side Players →That “day one value creation” you promise LPs? This is it, quantified. While your competitors waste quarters on consultant-led transformation theater, you’re banking margin improvement before the press release goes live. The operational narrative writes itself.
For Pre-Exit Positioning → The 24-18-12 month exit window just got weaponized. Beyond the simple multiple math, you’re demonstrating financially-engineered discipline in categories buyers chronically overpay for. This isn’t just cost-cutting––it’s strategic leverage on the sell-side narrative.
For Roll-Up Strategists → This is your systematic advantage. The real play isn’t 0.5% on one company––it’s the algorithm-like application across every acquisition. Your competitors are optimizing post-integration; you’re building a margin advantage into your platform thesis from inception.
Let’s be clear: this isn’t revolutionary. It’s the methodical exploitation of a persistent inefficiency the industry structurally incentivizes. Payment processors rely on complexity; we just weaponized simplicity.
Your deal team should see this yesterday. Your competition? They can wait a day or two.
Want to see what first steps look like? Book a chat with us here.
