EVO Payments, a merchant acquirer that has grown its business through more than three dozen acquisitions since 2011, is finding it increasingly difficult to find bargains despite the current macro-economic environment, Chief Executive Jim Kelly said at an investor conference this month.

With inflation surging for consumer goods and the Federal Reserve responding by increasing interest rates, the U.S. economy is expected to cool, and to chill red-hot company valuations, too. The U.S. stock market has already reacted with a nearly 11% decline in the Standard & Poor’s 500 Index over the past year.

Still, speaking at investment bank and research firm Cowen’s 50th Annual Technology, Media & Telecom conference earlier this month, Kelly said he hasn't yet seen prices come down significantly for targeted companies, but “it's still early."

“There are more companies like us than there was, say, 10 years ago that are acquisitive so prices are really what people are willing to pay,” Kelly said. The negative sentiment in the economy about inflation may become evident in the coming months, he said.

Kelly, who has been CEO at Atlanta-based EVO since 2018, suggested the company isn’t likely to make any acquisitions at the moment despite a spree of buying over the past decade. Given the current economic uncertainty, Kelly said he is cautious about adding additional cost to this company. 

A company spokesperson didn’t respond to requests for additional comment.

Nonetheless, the investment firm William Blair said EVO has a “strong appetite” for acquisitions, particularly to accelerate entry into attractive markets with low card penetration, such as South America and Europe, the firm wrote in a June 7 investor note.

The company’s purchase of a 51% interest in a joint venture with the National Bank of Greece for $180 million is expected to be approved by regulators by the end of the year, according to a June 1 investor note from Cowen.  EVO announced the deal last year. 

Once the purchase is final, Greece will account for about 15% of the company’s European business, according to the William Blair note. EVO will move as fast as the government will allow it in closing the deal, Kelly said.

“We believe EVO’s international business (60% of total revenues) remains underappreciated (by investors), as these markets generally have lower card penetration, more favorable revenue share between third-party relationships, and higher growth rates,” WillIiam Blair said in its note. “For example, card penetration is estimated at 60%-70% in the United Kingdom, Canada, and the United States, but only 53% in Ireland, 46% in Chile, 34% in Spain, 29% in Poland, 23% in Germany, and 21% in Mexico.”

EVO’s Americas business includes the company’s interests in Canada, Mexico, and Chile along with the U.S. The company’s Americas division generated 62% of the company’s total revenue in 2021 with the remainder coming from its operations in Europe where it has offices in Poland, Germany, Ireland, the United Kingdom, Spain, and the Czech Republic. 

EVO’s most recent acquisition was North49, a provider of B2B payments solutions for Sage accounting software.  That acquisition expanded its portfolio of integrations and created new opportunities for growth in the Sage ecosystem, according to Cowen’s note. Terms of the deal, which was announced May 23, were not disclosed. North49 is based in Burnaby, British Columbia.

“While growth remains strong in Europe, May came in slower” than the first-quarter’s 51% revenue growth rate, according to Cowen’s note, which noted that about 90% of the European payment volumes benefits from inflation and higher fuel prices.

EVO’s Poland business also got a boost from the influx of refugees from neighboring Ukraine in the wake of Russia’s invasion of Ukraine earlier this year, according to Kelly. The company entered that market in 2013 by forming a joint venture with Poland’s largest bank PKO Bank Polski, which gave EVO a controlling interest in the bank’s merchant acquiring business. 

“EVO generally helps merchants obtain better data/information, which reduces interchange and processing costs for merchants to accept electronic payments and can help merchants accelerate cashflow,” the William Blair note said. “EVO is well positioned to grow its bank partnership channel, ISV channel, B2B payments, and e-commerce businesses over the next several years.”