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Visa’s $1 Billion
of Pismo
Student’s name:
Course name:
Instructor’s name:
Date:
Context of Transaction and Brief
Success Story of the Startup
•
Visa’s acquisition of Brazilian fintech startup Pismo in a $1 billion deal was a
significant development in the financial technology industry.
•
Pismo was founded in 2016 in Sao Paulo.
•
It is a payment platform facilitating financial transactions in Brazil and globally.
•
It has grown to become a significant player in the financial market in Brazil.
•
It has big-name clients such as Citi, Nubank, Cora, and Revolt.
•
It processes over $40 billion worth of transactions yearly.
•
It also has over 40 million cards issued and facilitates close to 80 million accounts.
•
The success story of Pismo made Visa push to acquire it.
Deal Structure
•
The deal structure was cash.
•
Visa paid $1 billion cash to acquire Pismo.
•
The cash acquisition can be attributed to the confidence Visa has in
Pismo.
•
Cash transactions ensure clear-cut business dealings.
•
The exchange of money for shares completes a simple transfer of
ownership (Rappaport & Sirower, 2018).
•
Cash payment will ensure immediate liquidity to Pismo’s shareholders
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Opinion on Valuation
•
The approach I would use is discounted cash flow.
•
It considers future cash flows generated by the business and discounts
them to present value.
•
I estimate the valuation of Pismo to be around $758,157,353.83 at the
time of its acquisition by Visa.
•
Compared to the Deal Price valuation of $1 billion, Visa was willing to
pay a premium for Pismo
•
The premium payment was due to Visa’s strategic objectives and long-
term value growth for Pismo.
Rationale of the Acquisition by
Visa
•
The rationale for Visa’s acquisition of Pismo is strategic
and financial.
•
Strategic: Visa seeks to strengthen its presence in
Brazilian market and wider Latin America.
•
It will also gain access to Pismo’s advanced technology
and expertise.
•
Financial rationale: Visa can generate additional revenue
from the acquisition.
Post-deal Corporate Structure
•
The acquisition is classified as an acquisition rather than a
merger.
•
Visa acquired Pismo to further strengthen and expand its
presence in the fintech sector.
•
The acquisition gives Visa full control over the company.
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Proceeds realized by Founders,
Management and Investors
There is no specific details on the proceeds realized from
the acquisition.
Thus, it can only be assumed that the trio made some
significant gains from the deal.
Role of Founders and Key Team
Members After the Acquisition
•
Visa retains Pismo’s founders as its management team for
the startup (Azevedo, 2023).
•
The team will offer its expertise and knowledge.
•
The team will contribute to Visa’s wider strategic
initiatives in the fintech space.
Corporate Changes in Target After
Acquisition
•
It is anticipated that various corporate changes in Pismo
will happen.
•
This will be seen after the finalization of the acquisition by
the end of 2023 (Visa, n.d.).
•
It is anticipated that the changes will encompass
restructuring certain departments or teams to align with
Visa’s organizational structure.
•
There might be shifts in overall strategy of Pismo to align
with Visa’s long-term goals and objectives.
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Why Founders and Initial investors exited or
partially exited or stayed with the business
•
I think Pismo’s founders’ reason for staying with the
business is to see their vision fully realized.
•
Another reason is to contribute to Pismo’s success under
Visa’s ownership.
•
The founders have an attachment to the business aside
from monetary benefits and thus want to stay to continue
seeing it excel.
Performance Post Acquisition
•
Visa’s
extensive network and brand recognition will
undoubtedly open up new opportunities for Pismo to grow
and thrive.
•
Visa’s global presence will offer Pismo insights into the
international markets.
•
According to Pismo’s founder, the acquisition will help it
expand its global footprint (Pismo, n.d.).
Conclusion
•
Visa’s acquisition of Pismo was good.
•
It has given Visa access to an extensive market and Pismo’s
cutting-edge solutions in the fintech industry.
•
It will provide Visa with another revenue stream, thus
expanding its profitability.
•
Pismo facilitates over $40 billion worth of transactions
annually, thus adding to Visa’s global reach across 200
countries it has a presence in (Visa, n.d.).
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References
•
Azevedo, M. A. (2023, June 28).
Visa acquires Brazilian fintech startup Pismo in $1B blockbuster deal
. TechCrunch.
https://techcrunch.com/2023/06/28/visa-acquires-brazilian-fintech-startup-pismo-in-1b-blockbuster-deal/
•
Jordan, A. (2018, November 19).
Three in four entrepreneurs want to stay on after selling their business
. Small Business
UK. https://smallbusiness.co.uk/stay-on-after-selling-business-2546104/
•
Rappaport, A., & Sirower, M. L. (2018, November 1).
Stock or Cash?: The Trade-Offs for Buyers and Sellers in
Mergers and Acquisitions
. Harvard Business Review.
https://hbr.org/1999/11/stock-or-cash-the-trade-offs-for-buyers-and-sellers-in-mergers-and-acquisitions#:~:text=A%
20really%20confident%20acquirer%20would
•
Visa to Acquire Pismo
. (n.d.). Investor.visa.com. Retrieved October 21, 2023, from
https://investor.visa.com/news/news-details/2023/Visa-to-Acquire-Pismo/default.aspx
•
Visa to acquire Pismo – FAQs. (n.d.). Pismo. Retrieved October 21, 2023, from https://www.pismo.io/blog/visa-to-
acquire-pismo-faqs/
•
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