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Behind the Buyouts: Corsair's Schein on Payments, Software Mashup

Published: December 18th, 2023
Corsair Capital partner Jeremy Schein discusses the convergence of payments and software, unpacks a recent insurance exit and takes stock of sponsors' portfolio company pipeline.

In the latest edition of Behind the Buyouts, Corsair Capital LLC partner Jeremy Schein breaks down the convergence of payments and software.

“You can’t just be the guy or gal collecting the cash,” Schein said. “That part of the business is getting much more commoditized and is why we’re very focused on this integration of software into the payment space.”

Take Corsair’s Aurora Payments LLC, a consumer payments company that purchased salon software specialist NailSoft LLC this year. Aspects of the nail salon business — such as scheduling and tipping — could apply to other niches, opening doors to enlarge the business. “Think about pet grooming, broader beauty care, all sorts of businesses,” he said.

Business payments, which Corsair targets through an investment in TreviPay, lags the consumer market in some respects but presents an outsized opportunity.

“B2B payments is about as large and underpenetrated as a market as I’ve seen,” Schein said, putting the U.S. total addressable market at $125 trillion.

About 42% of business-to-business payments take place via paper checks and antiquated invoices. “Sometimes handwritten,” Schein said. “Sometimes they make it into the proper Excel file, sometimes they don’t.”

In the realm of more traditional financial services, Schein discussed the exit of Oakbridge Insurance Agency LLC this year. Corsair tripled revenue and Ebitda at the traditional insurance group — an effort that included 28 acquisitions in less than three years.

As we head to 2024, expect sponsors to explore exits. Around 25% of portfolio companies have been held for six or more years today, Schein noted. “We’re getting to the point where, even with what was some dislocation on value in the past year or so, private equity firms need to continue to advance the ball and dispose of some of these assets that have been in their portfolio for a while,” he said.

The Corsair partner also discussed dealmaking in the post free-money era, the impact of a looming election and the qualities that make an ideal Corsair investment.

Listen to the podcast with Jeremy Schein below:

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