What Is Residual Buyout?
A residual buyout, also called a portfolio sale, is when an agent or ISO sells its book of ongoing merchant residual income to a buyer for an upfront lump-sum payment, converting years of smaller monthly checks into one payout now, instead of continuing to collect the residual stream itself as those merchants keep processing.
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A residual buyout, also called a portfolio sale, is when an agent or ISO sells its book of ongoing merchant residual income to a buyer for an upfront lump-sum payment, converting years of smaller monthly checks into one payout now, instead of continuing to collect the residual stream itself as those merchants keep processing.
Residual Buyout explained
CCSalesPro publishes some of the most direct practitioner content found on this exact transaction, including dedicated pieces asking whether an agent can sell their merchant services portfolio at all and why an agent would choose to sell a residual portfolio rather than keep collecting it. The buyer is typically valuing the portfolio on a multiple of its current monthly residual income, adjusted for how stable that book actually is.
Stability is the whole risk in the deal, which is why an attrition guarantee is a standard contract term worth understanding before either buying or selling a portfolio, per CCSalesPro's own dedicated explainer on what an attrition guarantee actually covers in a residual buyout. It protects the buyer if merchants in the purchased book leave faster than expected shortly after the sale closes, since the value the buyer paid for assumed those accounts would keep processing.
That protection exists because attrition is a real, ongoing cost in this business even for strong performers: CCSalesPro reports that even agents described as "really good at selling merchant services" typically lose 10% to 15% of their portfolio every year, with industry-wide attrition running 30% to 40%, and that losing a single merchant account to a competitor can take up to three new accounts to recoup.
Why it matters when you're buying
If you're on either side of a residual buyout, the attrition guarantee terms matter as much as the headline price. A portfolio priced on last year's residual income without protection against normal 10% to 15% annual churn is a different deal than one with a real guarantee built in.
Frequently Asked Questions
What is a residual buyout?
What does an attrition guarantee protect in a residual buyout?
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