Zack Buckley on $PRTH's take private

0:00You're about to listen to yet another value podcast with your host me and you Walker today. We've got a really interesting one. You know, I'll just start with the disclaimer. I own the stock. So I always think that makes this dot go a little more interesting for me. Full disclaimer disclosure, whatever it is in the show notes and at the end of the podcast, but we've got Zach Buckley back on the podcast and the company we're talking about is priority tech. The ticker there is PRCH and Zach knows the company really, really well. And that's going to shine through in the first half of the interview when we talk about the different segments and break it down. And then the really interesting thing to me, the reason I'm involved, the reason Zach somewhere in the podcast is the chairman of the CEO offers to take them private in November and Zach published a public letter, all including to that in the show notes. If you want to go see it, but you know, in the back half of the show, we're going to talk all about that event. And that's what's got me really jazzed up and I'm talking fast. I always talk fast. But that's what's got me really excited. And I think hopefully it comes off. I think I know events decently well and this one is really interesting me and there's a lot of things that are just flashy red flags, not red flags, flashy signs that say interesting,

1:05weird, strange and that always gets me jazzed up. So we're going to talk about that in the back half of the podcast and Zach's going to chime into. He knows a lot about that as well. So I think you're going to enjoy it. You know, keep all the disclaimers, not investing advice, all that in mind. See the disclaimer in the show notes. We're going to get there in one second, but first, we're from our sponsors. This podcast is sponsored by Trata. Look, I've been mentioning them for almost a year at this point. If you like this podcast, you will like Trata. That's trat.com. They are two biceaters who just hop on a phone completely and on my skull, but they discuss a stock that they are interested in. Generally, to stock that both of them have a long position in, but sometimes it's one person who's long and one person who's kind of skeptical or sometimes you'll have a person who's long and a person who's short, but they're just going to come on and they're going to discuss what actually matters to them and the investment in stock. So if that sounds like a lot like this podcast, yes, that's a lot like this podcast. Yeah, honestly, probably better. They're really involved. They've got actual skin in the game. The conversations are really interesting.

2:05And the best you've found for it, aside from just getting on and talking to another knowledgeable person on it, is, hey, there's a new, there's a new transcript on a company I'm interested in. Let's see what people who are actually know the name. Let's see what they're really thinking about. So I think it's just a fantastic product. If you're interested, go to trotta.com. That's trat.com to check them out. All right. Hello and welcome to another value podcast. I'm your host Andrew Walker with me today. I'm happy to have one for it. It might be the sixth time. It might be the seventh time I'm not sure is that exactly from Buckley Capital. How's it going, buddy? Hey, I'm good. How are you, man? Doing good. Really excited to talk today. Before we get there, quick disclaimer. We're trying to everyone. Nothing on this podcast is investing in advice. I'll disclose. I'm going to talk about today. You should keep that in mind with everything we do. I'm sure that's true because he's on here talking about it. But there's a full disclaimer at the end of the podcast. In the show notes, you can check those out if you want the full disclaimer, not legal advice. So Zach, the company we're going to talk about today is trades under PRTH. It is priority technology holdings. It's a really fascinating company.

3:05I know you've been involved. You published a letter. I want to say last November, December, but I'll kind of stop rambling and let you give the overview of it. It's got a really interesting situation, which is why I'm so excited to talk about it. I'll stop rambling. I'll just talk to you over you. What is PRTH? Why are they so interesting right now? Yeah, absolutely. I guess before I get into priority, I just want to start with a disclosure, just given sort of that we have written a public letter. So obviously we're a shareholder of priority. Last November, we did publicly oppose a preliminary take-private proposal made by a priority's chairman at CEO Tom Pryori. So obviously I have a strong view here. So just I'll say everything I'm discussing today is based on publicly available information. And when I discuss valuation, those are my estimates and opinions. But the basic thesis is pretty simple. Over 90% of the company's business is either recurring or reoccurring, providing a very high level of predictability. 60% of its business comes from the high-quality treasury segment, which is effectively an 80% plus EBITDA margin, recurring revenue software business that has tripled EBITDA in the last

4:11four years. Now despite all that, priority today is trading between four and five times free cash flow for a business that's consistently growing free cash flow per share at 10% plus. So I think there's multiple valuation analyses that suggest the true and transient value of PRTH is significantly higher and sort of I wrote about that in the public letter that I put. But I want to talk a little bit about the segmentation of the businesses because I think that's really important. Can I just push you? And I'll note, I'm going to include a link to Zach's letter from November or December whenever it was in the show note. So if you want to go see that letter, you can pop up there and I'm sure we'll talk about the met. But please, break into the segments act. It just wants to note that. Yeah, of course. So priority is not just one payments business. It consists of three businesses with very different economics, merchant solutions, payables and treasury solutions. And I think treasury is really the key to understanding why the consolidated company is significantly under value. So it's not priority does have a payment processing business within it, similar to like shift

5:13for global payments, but treasury is really the majority of the value today. So treasury basically generated $215 million of revenue and around $180 million for just the ETA or roughly an 84% of the margin. So that's like database or very high margin software type economics. So what treasury does is the biggest component is CFTP, which came through their acquisition, prior to his acquisition of FinCera in 2021. So if you imagine you're a debt settlement company with hundreds of thousands of customers, a consumer might deposit $500 or $700 every month into a dedicated account while the debt settlement company is negotiating with creditors. So someone needs to establish and maintain those accounts. You have to maintain the ledger, you have to maintain and accept deposits. Someone needs to handle ACH transfers, wires and checks. All of this obviously needs to be reconciled. And then obviously eventually someone needs to send money to the creditors.

6:15And so CFTP provides that infrastructure. It's I think one of the most exciting things about that is the distribution because priority isn't going out and acquiring each individual customer or customer itself. It's integrating with enterprise partners that can then bring them tens or hundreds of thousands of underlying accounts on other platform. And so priority can establish one enterprise relationship and then monetize a very large number of end customers. And that obviously has created extremely attractive unit economics. So in terms of how they make money, they make money with enrollment fees when an account is established. They make a recurring multi subscription or servicing fee, basically as their account remains active and then they make transaction fees when the money is sent through ACH or check or wire. And so it's a highly recurring, again, essentially software like revenue that obviously has grown very fast over the last three or four years and also has an extremely high margin. So people think of priority as a payments business.

7:17I think of it more as a sort of conglomerate of various businesses, but CFTP is the most important business, which is why I'm starting with that. Maybe I'll just pause there if you have any questions. No, wait, I want to talk about anything specific. I do have questions on both the business and events, but if you want to go through the segments, why don't you keep going through the segments and then I can come in with the questions at the end of it. Yep, sounds good. So going into Fincer, just a little bit more. So acquired in 2021, when they acquired it, it was a sub-scale business, but it still had a 93 and a half percent gross margin and a 68 percent EBITDA margin as they've basically more than tripled the business over the last four years. It's grown to over 80 percent of just EBITDA margins. So it's been an incredible business both from a growth standpoint as well as from a margin standpoint. And I just want to harp on that because today priority is being comped to shifurable payments, other payments businesses. And while that is a minority of what they do, the majority of what they do truly is CFTPA.

8:19And I think that's just an incredible business that deserves a much higher multiple than the payment segment. So if you look at average, build clients has grown very dramatically. Money transmission revenue has compounded in the 20s. So I would say really, really attractive growth over a multi-year timeframe. The other thing I would say, so merchant solutions, I'm going to spend less time on. That's processing card transactions for merchants. Its economics look much more sort of like the conventional acquiring industry like a shift for our global payments. There was a very reasonable conflict occurred in June of this year, a business called Pay in the Air that was sold at about 8.3 times EBITDA. And if you just use that valuation, which I think under values priority, you would still get $12 a share and priority trades around $5.50 today. So you would still get over 100 percent upside from here. But again, I think it's worth more than that. Payables business, I'm really not going to focus on. It's just too small to be meaningful. I think the two main segments to really talk about our treasury immersion.

9:23So while there is a third segment, I just don't think it's worth harping on because it's relatively immaterial at this point. No, that's great. Again, the event is what really excites me here. But let's stick with the business. I do have some questions in the business for you. So I think you touched on it a little bit. But again, there's an event we're going to talk about. But anyone who's been following the markets knows that there's the SaaS apocalypse and there's the payments apocalypse that's happened over the past year. You mentioned several of the comps. You know, shift four is the one that comes to my mind. I understand the businesses aren't completely comparable. But I think shift four, just because so many value investors are in it. They've got the guy who's over at NASA now, they huge share of buybacks, pretty controversial stock, cheap, huge share of buybacks. That's the one that pops mine. But there's certainly others. All of these guys have been slaughtered for the most part over the past year to 18 months. So I guess I would just start off just very high level. You've kind of laid out why you think this business is a little bit different than some of those. But what gives you confidence when you're buying this that you're not kind of buying

10:24a terminal zero or you look at the rest of the payments face and say, hey, this isn't exposed to some of the brutal competition or the metamuse or all this things that are going to displace these things. What gives you the confidence here? Yeah, I guess the first thing I would point to is that just paying your transactions, I mentioned, that literally happened in June. So that incorporates the payments apocalypse and incorporates the SaaS apocalypse. And it still was 8.3 times EBITDA. And that would be about a $12 stock for priority. Now again, that is for the payments component. So if we want to just simplistically, just for the audience trying to say, roughly 60% of the business is more of a software recurring revenue business, roughly 40% of this payments. That's an oversimplification, but I think it's close enough. The SaaS businesses that are growing at the level that Treasury Solutions is growing, still command double digit EBITDA multiples. So those businesses are still, if you look at toast, if you look at par, if you look at various businesses that are relatively similar in the payment space, you're still looking at

11:26double digit multiples. So that's the first thing I would say. And you also have a private transaction that literally just occurred in the sort of 8.3 times range. So I think you have enough from that perspective on the multiple basis. And then just from a business quality standpoint, Treasury Solutions isn't going anywhere. AI is not displacing that. There's really no way that AI would have anything to do with that because it's integrated financial infrastructure. So AI is not going to set up bank accounts for customers. It's not going to set up those transactions. Those things are all things that I think are sort of not at risk at all for AI. Go ahead. I'm just laughing because you are probably right, but the past week, my feed's been blown up with this new instinct chatbot. I don't know if you've seen that and met a launch and used this morning. So I do hear you on there, probably not going to launch. They're probably not going to set up bank accounts. But literally what instinct does is take your social security number and set up bank accounts and stuff. So it's moving. I do 99% agree with you, but there's the 1% of me that's like, oh man, it is moving

12:27really fast up there. Let me just ask one more question on the business. You know, I've been reading the earnings calls obviously as I've been involved in following this process. And there's one really interesting thing just at a high level that jumps out. Now they kind of blame the accounting and they 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 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. So I just want to ask you like, how do you look at this business with, there's a lot of different moving parts and there's a little bit of accounting complexity. Like, how do you think the business is just performing into here and now? 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 your basis,

13:31which I was I think is important. Again, I think treasury is the business I'm the most focused on and that continues to grow. And so I guess generally speaking, 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 a business that's still growing free cash will per share at 10% plus. You know, 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, the but does come down actually quite a bit. So they're paying down debt every single quarter. So yeah, I think the business is doing quite well, especially given the overall environment. You mentioned today, you mentioned net debt, and I think that's the one other place people might get a hung up on now. You also gave the valuation on the painier multiple and the stock would be like more than a double on the painier multiple. So that kind of solstice, but I think the other people that people might get hung up on is you look at this balance sheet and there is a lot of debt, right?

14:34And people might say, Hey, he's actually doing a free cash flow number. And that's great, but there's a lot of debt in front of that. So do you just want to talk about how you think about the leverage and kind of the financial profile of the company? 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 Pfizer or Schifff or global payments, they're all at relatively similar net debt levels. So given these are highly recurring revenue businesses with a very high degree of predictability, like they're comfortable carrying a certain debt. This is actually the lowest leverage that it's had since it 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 times now, but it's also coming down very rapidly. Perfect. All right. Let's get to the part that really excites me. And that is the event here. So I mean, I think there's a lot of history, but the there's stuff that happens before this that I think is actually important. But the reason you're coming on the reason I'm so interested is in November,

15:36the CEO who owns I think 56% of the company, it 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 offers on acceptals. So I'll just toss it over to you kind of like what were you seeing? Cause I do have a rule. Hey, if somebody offers a premium for my stock, I'm always interested. What were you seen? And why do you think the offer kind of is not in the best interest of minor or shareholders or is too cheap or whatever the language you want to put alongside it is? Yeah. 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 five days prior. Exactly. This that's called giving you a softball, right? I'm tossing you the softball. You just got to explain it. Yeah. So, you know, the stock was down over 50%. And I think my suspicion is, and I don't know this for sure, but I would imagine he was frustrated by the share price performance, which I can

16:39understand. 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, six to six, 15 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, 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. And I think there's both public market and recent private market comps, including Paneer that validate that opinion. Can I just back up a little further? So what happens is, again, I want to emphasize this is a small, e-liquid stock. The chairman owns 56% of the company and board insider zone,

17:40another two or three percent, right? So 60% of the company is owned by board and insiders. They report earnings on November 5th or something, right? And the earnings this fight, I thought they were fine, but you know, I'm not a payments expert. The stock craters on the earnings. You know, you can correct me if I'm wrong. It goes from nine to five or something, right? It's a seven-ish to five, yeah. Something like that. And the next day, two days later, the chairman with this doctrine, five, the chairman puts in an offer to buy the company through 13D to buy the company for six to six, 15 is the range he puts in. So if you, you know, if you had a 24 hour view and maybe we're all marked 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 were fine to me. I have seen companies kitchen sink and then do a take private or, you know, this is an e-liquid 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

18:40a very opportunistic bid on an e-liquid stock that was down on almost basically one print. So I'll pause there if you have anything else on just like the trading dynamics. 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 advisor, which I think is a very strong financial advisor and Paul Weiss is 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 values likely to be realized. So let me go to a few other things. So the offer is made in November. And I've actually had, I can't tell you how long my notes on this offer and everything else, 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, their retainers in December of 2025.

19:42You publish a letter in November. We're in September of 2025. It's been nine to 10 months. Like this is a long process. 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. Always have to be careful in speculating. I'll say my hope is that I'm going to have to be careful with the 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 to the extent that he wants to raise a spid. 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. I think if I was to speculate, it's possible, the painier transaction, just given how recent of a comp it was. Maybe that pushed the prices up and kind of gave us a recent transaction comp. Again, this is pure speculation on my point.

20:44But to be clear, I think there's very good reasons why priority is worth more than painier. So just I think the nuance that I would point out and why I think pain or deserves a haircut is because it has much higher stock based comp, catbacks and capitalized software with a very small difference in organic growth. So the EBITDA to free cash flow conversion that priority has is significantly better than painier. And so if anything, I think it's pretty clear to me that priority deserves a premium to pay in here. And again, if we were just using the painier price, it would be $12 to share today. I think it deserves a significant premium given a 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, basically to negotiate it. You know, that's a great point. I hadn't thought of how a painier mark, you know, when it happens in June, so that's let's just call it six months after the bid when, you know,

21:45that's where you think things are going to really. I hadn't thought how that might have changed the negotiating dynamics or cause 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 loves in his first bid in let's call it November 10th. 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 five 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 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 a third to third party? Yeah, I think there's a variety of things that could be happening behind the scenes. 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

22:47shareholders 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 evaluation and the chairman still getting to maintain his ownership state to the extent that he wants to. The company did a secondary offering. I think it was largely 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, that's probably worth more than where we're selling shares.

23:52I'm assuming that's what you're referring to or is there anything you want to point out? So this was, and you can correct me if I'm wrong, there was 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 the company said, Hey, we had the selling stockholders, which includes the chairman who sells a little bit had the opportunities 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. Then we have to right now because the price is crazy. And we think the companies worth much more than that, which, you know, that was something that was communicated, not like put in a print, 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 6 or whatever it is. And they were communicating that they thought it massively undervalued the company. Yeah, makes sense. Yeah. Sorry. I was thinking about where the stock was actually trading at the time. Yeah. I mean, I think that's true. I think I don't think there's any doubt that this stock is dramatically undervalued.

24:57I think it's just what will happen in this 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 have an incredible risk award because in the very worst case scenario, theoretically, you're looking at 6 to 615 a share, which is 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 three months. And on the high side, 100% plus return over the next few months. So I think it's just a very attractive risk award given that dynamic. No, look, I mean, that's why I'm both, I would say the other thing, I was pushing on timing. And the interesting thing I've seen is, this sounds tripped, but the ones that have had

25:59longer timing that have really dragged on the tooth. Now, me as an investor, like it makes me pull my hair out because I'm like, what the F is going on? Do these guys have any clue what's happening? Do they have any clue it's doing? But the ones that have dragged out, I have personally noticed for the most part, it's because the, it's actually pretty serious. And there's real negotiations going back and forth between the parties and there's something going on behind the scenes. Now, I can think of ones where that something I think has ultimately, I mean, it worked out for shareholders, but I think it ultimately was detrimental for shareholders. Like they would've gotten even bigger premium if they had kind of pulled the trigger earlier. But, you know, I'd point to something like a KOR got taken out recently and that was a, it took a little bit while, but that came out at a pretty big premium. 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 don't think anything can be further from the truth. Like I think there's real negotiations and real work getting done. And if I can remember for a second, I would point to, you know, there are just at eBud at a number, they add back the legal costs of the special committee.

27:03And in Q2, it was like three million bucks was the add back. If you look at the Delta year of year, like three million bucks for a process in three months that hasn't, like you generally get paid as a banker or a success fee, three 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. So I remember a lot there. I'm happy to toss it over to you if you have any thoughts on that. Yeah, I think like I said before, I think the most likely reason for taking this long is potentially something like the pay and your 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 for a bus process is take a fair amount of time. So 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 relative to processes that I've watched over time. Some of those processes, you know, result in transactions, some don't. So I can't say with absolute certainty that a transactional occur here, but certainly I don't think the amount of time that's transpired means that a transaction won't occur.

28:04Do you think priority would be an attractive strategic acquisition target to a strategic? Absolutely. Yeah. I mean, for anyone really, I mean, for a private equity firm for a strategic, I mean, I would like that treasury solutions businesses of jam, like that is an incredible business. So I agree on private equity firm, but 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 in the CEO. Let's get, let's go in our fever, James. The CEO's bumped his bit up to eight and there's a strategic at 12, 15, whatever number you want to choose, right? And the tension is the special community. I mean, they can't sell without the CEO's blood blessing, right? But the special committee going to, 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.

29:04If 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 itself? So I could see something like that happening here just because I agree with you. I think this is a very strategic asset. And the history of payments suggests there's always three strategic bidders who want to buy you, rip out your SGA 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 SaaS box ellipse, it used to be, you know, 13 to 15 times NTM. You've, uh, now we're talking eight to nine times and we're still getting huge upside. So, um, I think eight to nine times is probably the floor of where a transaction should occur for this. And I could easily see it happening much higher. And again, you know, eight to nine times is a $12 stock or higher. The other interesting thing here is I followed a lot of these and most of them will open up

30:06their 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 hand that's of a special committee. If it's just a general company that's announced a strategic review, they'll say, Hey, 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 addbacks from the strategic process. And the very last question in the most recent earnings call was an analyst. I can't remember what thank you is from, but he was saying, Hey, all investors really care about is this strategic is this special committee. And you guys haven't talked about nine months. Like, can we get an update? Can you guys do something? And they didn't cut them off, but they didn't respond. They ended the call after that. So I don't know, like, 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 think it's uncomfortable and I understand why people don't like it.

31:07But 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 this, you know, the strategic review. And there's not really a big difference between the two. See there, 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 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 this 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. 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 decided. No, you make some great points because I am with you. 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.

32:09And 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 I don't know if you came in and announced a deal at eight, I'd probably have you on a market market basis, but I don't know if that undervalues or overvalues the company at that point. 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 committee gets reviewed. Like, I remember one time, 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 is there. They're waking to us that there's a deal coming and the deal should 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 earnings calls off, especially when the CEO bids for the company. You always worry that they're going to start kitchen sinking things, right?

33:12So that shareholders are kind of happy to give the get rid of the business. And it is interesting. If you review their earnings slides, how their earnings decks 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 the earnings call. They used to highlight this thing that said, hey, we're continuing to shift to the higher value segments, right? And they was treasury and they would talk about how their business is moving over there. So it's getting better business, better marginal that they dropped that. And they used to have a financial guidance slide that said, hey, here's that our financial guidance and breaking 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 want to be careful to speculate on things that I just don't know.

34:18I 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 advisors that have advised on other similar payments transactions that know the industry and the space and the valuations very well. And then I'm confident there are just a ton of comps for this business. That'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 is, again, on the low end, you have a bid that's currently, 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

35:20dislocated 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. The other interesting is, I mean, again, I get all obsessed with the event process, but it has been kind of business as usual for the company, right? They recently announced a small little tuck in acquisition. And when you've, when you've got a payments company like this, again, the reason strategic is left to buy these is the S, G, and A and the synergies are just massive. They just did a little tuck in acquisition. The business has performed well to my eyes. 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 this special committee strategic process to get done. But if the, 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 if 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.

36:21So I think there's a lot of optionality on the back end just given how the business is performing here. 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 it, you know, less than five times for cash flow, like true free cash flow, not like a adjusted number with a lot of stock based comp, like an actual true free cash flow number. 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 sting 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 probably, I mean, I always agree. But even 10, I think they would be getting a steal out. And that's just so far above the current price. It's laughable. But this is a levered entity that's performing well. There are synergies to taking this private.

37:21You know, this is what it's at 10. It's what a 600 million, 700 million mark cap, something like that. Maybe I'm a little off, but you probably say four to five million in public company costs and the CEO already owns 60% of this. So 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, like four million on a 200. That's a pretty, pretty solid return right off the bat. So yeah, anyway, anything else we should be talking about to think about with priority? Again, 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, you know, world pay, avid exchange, new vie, you know, paying near. There's a ton of different examples. And I think if you just spend time looking at the quality of the business, the amount of private comps that are out there,

38:24I think you can get really comfortable to this is just an incredible risk award here. And I think very limited downside over a long period of time and a really significant, significant upside. And potentially you're going to realize that in the very near term. So I think it's really exciting from a risk-roar standpoint today and super attractive. Perfect. Well, thanks for coming on. Thank you for sending the letter to the board because I think one thing people underestimate is when you're in these special processes, letting this special committee know, hey, this price is way too cheap. Like that gives them something to stand on and something to point. And a shareholder saying, giving them some directions, I think, actually is really helpful. So thank you for your work there and publishing that and looking forward to having you on again in the near future. Yeah, absolutely. Thanks so much for having me on. Appreciate it. A quick disclaimer. Nothing on this podcast should be considered investment advice. Guests or the hosts may have positions in any of the stocks mentioned during this podcast. Please do your own work and consult a financial advisor. Thanks.