PRI相对于其强劲的现金流和增长被显著低估；当前的私有化收购报价并不充分，但通过修订后的交易或估值重估，该股具备较高的上行潜力。

blame different things, but you read the Q2 call, right? And they say, "Hey, we're raising our revenue guide or we're going to come in at the high end of our revenue guide, but we're going to come in at the low end of our EBITDA guide." And then as you keep reading it, they're talking about, hey, we've got all these businesses that are growing quicker than our overall business, but a lot of a lot of the businesses are lower margins or they've got some things. Now, this is partly influencing the revenue and margin. They've got some things where they're the payment of record versus a merchant. So, they're booking it at a much lower gross margin.

I mean, I think the business is performing completely fine. You know, I think you still have Treasury growing very nicely on a year-over-year basis, which obviously I think is important. Again, I think treasury is the business I'm the most focused on and you know that continues to grow. Um, and so I I guess generally speaking, I'm I'm happy with how things are going.

you know, I think again everything's relative, right? When you're paying four to five times free cash flow and you're talking about out of business that's still growing free cash flow per share at 10% plus, you know, I it's it's priced for a business that's going out of business when in reality it's actually generating a ton of cash. you know, net debt even does come down actually quite a bit. So, they're paying down debt every single quarter.

So yeah, I I think the business is doing quite well, especially given um sort of the overall environment and valuation today. Yeah, I mean I would say their financial profile is very similar to other peers. So if you kind of look across the payment space, whether it's Fiserve or shift for global payments, they're all at relatively similar net debt deep levels. So given these are highly recurring revenue businesses with a very high degree of predictability, like they're comfortable carrying a certain debt load. This [snorts] is actually the lowest leverage that it's had since like in years. And so if anything, I would say it's safer today than it was in the past. And you can also see that debt is coming down very quickly on a quarterly basis. So again, it's at 3.8 eight times now, but it's also coming down very rapidly.

the reason you're coming on, the reason I'm so interested is in November, the CEO, who owns I think 56% of the company, I could be off, but he owns the majority of the stock here. He offers to take the company private for $6 to 615, I think, is the number. And that is a huge premium to the prior day closing price. But you I think Steamboat comes out and says, "Hey, this offer is unacceptable."

So, just to be clear, he made a premium to the stock price like the day before, but it wasn't a premium to the stock price 5 days prior to that. Uh, yeah. So, you know, the stock was down over 50%. And I think my suspicion is, and I I don't know this for sure, but I would imagine he was frustrated by the share price performance, which I can understand. I was also frustrated by the share price performance and decided to make an offer above where the current share price was. But I don't think that is a fair offer. Again, 6 to 615 was the offer. You know, I wrote publicly in my letter some of the parts around 17 a share. Like a more simplistic multiple analysis gets me to around 19 a share, you know, and I was using a very conservative multiple for Treasury Solutions in that some of the parts analysis. So I You know, again, he he made an offer to a premium or to a stock price that was significantly dislocated. So, I don't really think the percentage above where the stock was the day before is anywhere near reflective of intrinsic value.

So, what happens is, again, I want to emphasize this is a small eliquid stock. The chairman owns 56% of the company and board insiders own another 2 or 3%. Right? So 60% of the company is owned by board and insiders. They report earnings on November 5th or something, right? And the earnings despite I thought they were fine, but you know, I'm not a payments expert. The the stock craters on the earnings, you know, you can correct me if I'm wrong. It goes from 9 to five or something, right? Sevenish to five. Yeah,

something like that. And the next day, two days later, the chairman with the stock trading at five, the chairman puts in an offer to buy the company through a 13D to buy the company for 6 to 615 is the range he puts in. So if you, you know, if you had a 24-hour view and maybe we're all mark tomarket, you could say, "Hey, this is a big premium." If you had any longer view, you would say, "Hey, this is a discount." And you know, I don't think this is what happened here because again, the earnings refine me. I have seen companies kitchen sink and then do a take private or you know this is an eliquid stock. But to me it looks a little bit like and you might be right it might be frustration with the stock price trend but it seems very clearly a very opportunistic bid on an eliquid stock that was down on almost basically one print.

Yeah, nothing on the trading dynamics itself, but I would just say like when we wrote our public letter, we asked the special committee to conduct an independent and robust review of strategic alternatives and to focus on the intrinsic value of the businesses rather than simply a premium to the stock price. You know, since then the special committee retained Barclays as a financial adviser, which I think very strong financial adviser and Paul Weiss as independent legal. So I think I think the special committee is taking this very seriously and you know I think those are important protections and I think fair value is likely to be realized.

So let me go to a few other things. So the offer is made in November and I've actually I can't tell you how long my notes on this offer and everything goes but I think the first thing a listener might hear is okay the offer was made in November of 2025. I think the special committee hires uh the special committee hires their retainers in December of 2025. You publish a letter in November. We're in September of 2025. It's been 9 to 10 months. Like this is a long process. Uh so again, I've got lots of notes on this, but I would just ask you like what is going on with a process that runs this long?

Yeah, I think there's a variety of things that could be happening. uh always have to be careful in speculating. I'll say my hope is that they're looking for and running a process for third parties to buy it because ultimately I think that would lead to the highest intrinsic value. I think the second thing that could be happening is a negotiation between the special committee and Tom the extent that he wants to raise a bid. I think there could be a negotiation going on there. And then also there's just things that happen behind the scenes that we don't know.

Um so just I think the nuance that I would point out and why I think pay pain payer deserves a haircut uh is because it has much higher stockbased comp capex and capitalized software [snorts] with a very small difference in organic growth. So the IBITA to free cash flow conversion that priority has is significantly better than Payaneer. And so if anything I think it's pretty clear to me that priority deserves a premium to payer. And again, if it we were just using the payer price, it would be $12 a share today. I think it deserves a significant premium given significantly better conversion. And so people could say we don't have anything recent until that transaction. Now we have something very recent that points to a much higher stock price. And I think that gives significant negotiating leverage for the special committee uh basically to to negotiate.

You know, that's a great point. I I hadn't thought of how a paying mark, you know, when it happens in June. So that's let's just call it 6 months after the bid when you know that's when you think things are going to really I hadn't thought how that might have changed the negotiating dynamics or caused everyone to reset or something.

The first thing you mentioned was a third party bid and the other interesting thing here and there's a lot of interesting things here is the chairman lobs in his first bid in let's call it November 10th uh and then about a month later I think it's actually December 17th but about a month later he files an updated 13D. This is about 5 days after the special committee hires their financial advisors that says, "Hey, the special committee asks and I'm letting them know I have no interest in selling to a third party." Now, this is not uncommon and take private offers, but I absolutely hate it because it it has a real chilling effect. So, how do you think about the, you know, the first thing you mentioned was a third party. How do you think about that in light of the chairman who owns 60% of this has said, "I don't want to throw it to a third party."

Yeah, I think there's a a variety of things that could be happening behind the scenes. Um, I want to be careful in speculating, but what I would say is I think the way the language was worded, it's certainly possible for a third party to buy the minority shareholders and still for the chairman to maintain his ownership and roll it into a private vehicle. So I think the way that I read the language, I certainly think there's a possibility of minority shareholders being made whole, you know, with a fair valuation and the chairman still getting to maintain his ownership stake to the extent that he wants to.

The company did a secondary offering. Uh I I think it was largely uh selling stockholders, not the company, but the company did one in January of 2025, and I think that's become an interesting data point for a lot of shareholders. Do you want to kind of talk about what that priced at and kind of what the language around that transaction was?

Well, I'm assuming your point is that they were selling stock in early 25 at, you know, more than or roughly double sort of the proposed take private price and that at that point Tom didn't sell any shares in that offering, you know, meaning, you know, he kind of thought it was worth, you know, implicitly through not selling any stock, he was kind of saying it's probably worth more than than where we're selling shares. I'm assuming that's what you're referring to. Or is there anything else you want to point out?

So, this was, and you can correct me if I'm wrong, there was a a secondary offering in January of 2025 where a bunch of shareholders sold stock at it was 775, I think was the price that came out. And the language that I heard, and I think one of the letters mentioned this, was uh the company said, "Hey, we had the the selling stockholders, which includes the chairman who sells a little bit, had the opportunity to sell more." And they're like, "No, this price is ridiculous. It undervalues us like crazy. we're not going to sell any more than we have to uh than we have to right now because the price is crazy and we think the company's worth much more than that which you know that was something that was communicated not like put in a but I thought that was interesting on a host of levels I mean they they did a secondary at 775 and now they're trying to take the company private for 610 or six or whatever it is and they were communicating that they thought it massively undervalued the company.

Yeah, it makes sense. Yeah, sorry I was thinking about where the stock was actually trading at the time. Um yeah, I mean I think that's true. I think I I don't think there's any doubt that this stock is dramatically undervalued. I think it's just what will happen in the strategic process. I think that is ultimately what we're waiting for. But I think my point to you know people listening to this looking at it for the first time is you [snorts] have an incredible riskreward because in the very worst case scenario theoretically you're looking at 6 to 615 a share which is you know roughly 10% upside from here. In a most likely scenario, you're looking at I mean, fair value is certainly well north of 100% from here. It's hard for me to say what a transaction results in, but let's just assume a transaction results in fair value. You're potentially going to make 100% over the next few months. You know, you're already very deep in this process. If you're buying today, you're getting on the low side, I suppose, a 10% return over the next 3 months and on the high side 100% plus return over the next few months. So, I think it's just a very attractive risk given that dynamic.

There's been several others, but I think people look here and say, "Oh, there's been no update." And I want to talk about no update in a second. There's been no update. Nothing's happening. I I don't think anything could be further from the truth. Like I I think there's real negotiations and real work getting done. And if I can ramble for more a second, I would point to, you know, their adjusted EBA number. they add back the legal costs of the special committee and in Q2 it was like three million bucks was the ad back if you look at the delta year-over-year like three million bucks for a process in 3 months that hasn't like you generally get paid as a bank or a success fee 3 million bucks is a big big increase like I would suggest that the negotiations are kind of hot and heavy if they're running that big bill

yeah I think like I said before I The most likely reason for taking this long is potentially something like the payaneer transaction just creating a very recent comp and that leading to further negotiations. I think the other thing is they're just running a robust process and sometimes robust processes take a fair amount of time. So I I don't think this is I think this is on the long side of a typical process, but I don't think it's by any means unusual

Do you think priority would be an attractive uh an attractive strategic acquisition target to a strategic? Absolutely. Yeah. I for I mean for anyone really think of I mean for a private equity firm for a strategic I mean I would like that treasury solutions business is a gem like that is an incredible business.

I so I I agree on private equity firm but I I mentioned strategic because I could see one scenario happening where the CEO says I'm not selling to anyone. The company runs a full and fair process and they're sitting there and the CEO let's get let's go in our fever James the CEO's bumped his bid up to eight and there's a strategic at 12 15 whatever number you want to choose right and the the tension is the special committee I mean they can't sell without the CEO's ble blessing right but the special committee going hey we've got this massive premium bid you need to get your you need to get your bid up like we could sell to you at 11 if there's a strategic at 12 but you say we won't we you won't do to anyone else if you're at nine like we can't do that and you also need to look yourself in the mirror and say hey why do I want to take this private for nine when there's a strategic who should pay the highest bid at 12 like shouldn't I just go engage with the strategic and sell so I could see something like that uh happening here just cuz I agree with you I think this is a very strategic asset and the history of payments suggests there's always three strategic biders who want to buy you rip out your SGNA and just realize huge synergies because the synergies to deals are massive.

Yeah. I mean, there are a ton of comps for I mean, prior to kind of the payment SAS apocalypse, it used to be, you know, 13 to 15 times NTMA. Now, we're talking 8 to N times and we're still getting huge upside. So, um I think 8 to N times is probably the floor of where a transaction should occur for this. And I could easily see it happening much higher. Um, and again, you know, eight to nine times is a $12 stock or higher.

You The other interesting thing here is I followed a lot of these and most of them will open up their earnings calls, right? And they'll say, "Hey, we know everybody wants an update on the strategic process. We can't update it." You know, if it's a CEO trying to do a take private, they'll say it's in the hands of a special committee. If it's just a general company that's announced the strategic review, they'll say, "Hey, we we won't share any news." The company hasn't even acknowledged the strategic process. you know, there's been three earnings calls, Q4, Q1, Q2, and they haven't even mentioned the strategic process in any of the calls except to say, hey, there was increased adbacks from the strategic process. And the very last question in the most recent earnings call was an analyst. I can't remember what bank it was from, but he was saying, "Hey, all investors really care about is the strategic is this special committee, and you guys haven't talked about in nine months. Like, can we get an update? Can you guys do something?" and they didn't cut him off, but they didn't respond and they ended the call after that. So, I don't know. Like, what do you make they What do you make of that? It's just very weird to me.

Yeah. I look, I think it's the appropriate thing to do. I I think it's uncomfortable and I understand why people don't like it, but I think there is absolutely a robust process happening behind the scenes. And I mean, you can either say nothing or you can get on and say we can't comment on the, you know, the strategic review. And I there's not really a big difference between the two. It's it's either we can't comment or you just say nothing. And either way, it's saying nothing. So I think from a legal standpoint, they're doing the right things. I appreciate the fact that they're still holding conference calls. Some some companies don't hold conference calls during strategic review processes for that exact reason. So I actually appreciate the fact that they are at least holding conference calls during the strategic review. and I respect their reasoning and their thought process and not commenting. Even though I can also empathize with the shareholder base that's frustrated and wants to hear something, but as soon as they have something that's finalized and they can communicate, I'm sure they'll be communicating with us and at that point we'll get to evaluate what they've decided.

No, you make some great points because I am with you. Like one of the things that sucks is when a company goes into a strategic review and then they black out and you're like, "Hey, I'm a shareholder and this is not an easy business to understand. There's a lot of numbers, a lot of moving parts. Like if you're not giving any commentary to me, you've kind of turned this into a black box and now I don't know like if you came and announced the deal at 8, I'd probably be happy on a markettomarket basis, but I don't know if like that undervalues or overvalues the company at that point, right? So I think you're right, it's nice that they continue doing calls. And you're probably right that just saying nothing is the best thing because I will tell you, I've done these before and every word that you say when you're in a special when you're in a special committee gets reviewed. Like I remember one time uh one company they had ended every earnings call saying like we can't wait to talk to you next quarter and they were in a strategic review and they didn't say that and I had a few friends who were like oh my god the deal is coming like this they're they're winking to us that there's a a deal coming and the deal did not come but everything gets read you know the other interesting thing here is I always worry and this is one of the reasons a lot of companies do take uh earnings calls off especially when the CEO bids for the company you always worry that they're they're going to start kitchen sinking things, right? So that shareholders are kind of happy to give the get rid of the business.

And it is interesting if you review their earning slides, how their earnings have evolved from before the process to after the process. So this would be Q325 is the last earnings they do before they make the bid.

You know, they have taken away a few slides. Like it does feel like they're talking it down a little bit. And I would just point out they used to do a recent business wins update slide. They haven't done that since they announced their earnings call. They used to highlight uh this thing that said, "Hey, we're continuing to shift to the higher value segments, right?" And they treasury and they would talk about how their business is moving over there. So, it's getting better business, better margin. That they dropped that and they used to have a financial guidance slide that said, "Hey, here's that our financial guidance and break it down." And they dropped that. They still guide, but I just thought it was interesting that they started pulling down a lot of the KPIs. I don't know if there's any I don't know if there's any fire there. I don't know if there's any smoke there, but I just thought it was worth noting.

Yeah. I mean, again, I I want to be careful to speculate on things that I just don't know. I I think again, what I would reiterate is I feel very comfortable and confident that there are independent director directors on the special committee that are being advised by very good financial adviserss that have advised [clears throat] on other similar payments transactions that know the industry and the space and valuations very well. And then I'm confident there are just a ton of comps for this business. It's not like there's one or two comps. I mean, there's a lot of recent comps. There's a lot of comps over the past 10 years and they just all point to, you know, sort of massive premiums to where the stock is today. And so I think again the opportunity from my perspective for anyone looking at this for the first time [snorts] is again on the low end you have a bid that's currently uh I think completely disconnected from intrinsic value but still 10% higher than where the stock is today and then at the high end you have a perspective takeout that could be north of 100% from here. And then theoretically, if this were to stay public, you know, you have a stock that is extremely dislocated and probably doubles in a relatively short period of time as it should reach intrinsic value as people start to follow the story more and really think through the segmentation.

Yeah. And the other interesting is I mean again I get all obsessed with the the event process, but it has been kind of business as usual for the company, right? They recently announced a small little tuckin acquisition. And when you've when you've got a payments company like this, again, the reason strategics love to buy these is the SGNA and the synergies are just massive. They just did a little tuck in acquisition. The business has performed well to my eyes. I I I mean, you went through it, but you know, it's growing. It's generating a lot of cash. The cash is kind of building up on the balance sheet as they wait for the special committee strategic process to get done. But if they if they don't reach a deal like this is a business that is performing well all of a sudden the 50 million or so so of cash that they've generated so far this year they can just go pay down debt or they could do a share repurchase. They have done very tiny share repurchase in the past. So I I think there's a lot of optionality on the back end just given how the business is performing here.

Yeah. Yeah, I mean, look, I just don't think there's any business out there I can point to where you have, you know, high recurring revenue, high barriers to entry, you know, strong growth, and it's trading at, you know, less than five times free cash flow, like true free cash flow, not like a adjusted number with a lot of stockbased comp, like an actual true free cash flow number. I I think it's just extremely rare in the public and the private markets. I think it's an incredible deal here and I think that will get realized one way or the other whether it's through a private transaction or whether it's the stock staying public.

Perfect. Well, you know, I I hope it is through a private transaction. I hope it is through one sooner than later and I hope it is at a massive premium because honestly, if it was 10, I would pro I mean, I I always think of it, but even 10, I think they would be getting a steal at and that's just so far above the current price, it's laughable. But this is a lever entity that's performing well. There are synergies to taking this private you know this is what it's at 10 it's what a 600 million 700 million market cap something like that maybe I'm a little off but you probably save four to5 million in public company cost and the CEO already owns 60% of this so you say hey I write a 200 $300 million check I own this whole business at a really interesting multiple and by the way I say four million in public company costs per year like4 million on a 200 that's a pretty pretty solid return right off the bat so yeah anyway anything we should be talking about or thinking about with priorities.

Again, I would I would really just encourage people to go look at the various segments of the business. Really spend time to understand Treasury Solutions because that is just a really I think incredible business. You know, spend time looking through all the different M&A transactions. I mean, you have a lot of recent ones. Um, you know, World Pay, Avid Exchange, uh, Nuvi, you know, Payaneer, there's a ton of different examples. [snorts] And I think if you just spend time looking at the quality of the business, the amount of private comps that are out there, I think you can get really comfortable that this is just an incredible riskreward here and I think very limited downside over a long period of time and a really sign significant upside and potentially you're going to realize that in the very near term. So I think it's really exciting uh from a riskreward standpoint today and super attractive.