Webinar: How PE and VC firms can drive portfolio value | CFO Dive

00:00 

Welcome everyone, and thank you for joining us today. I'm Megan Billingsley, and today's conversation is all about embedded payments as a value creation lever—not just for the software platforms that deploy them, but for the private equity and venture capital investors that back those platforms. Before we get started, I have just a few housekeeping items. Please note that the slides will advance automatically throughout the presentation. To enlarge the slides, click the Enlarge Slides button located in the top right corner of your presentation window. If you need technical assistance, click on the Help widget located in the bottom left corner of your console. We encourage you to submit questions at any time throughout the presentation using the Q&A widget at the bottom of your console. We will try to answer these during the webcast, but if a fuller answer is needed, or we run out of time, they will be answered later via email. Please know we do capture all questions. We're joined by two leaders who recently co-authored joint research on exactly this topic. Mo, Jeff, thank you for being here. Before we dive in, I would love for each of you to give a quick introduction and share a bit about your background and the work you did together on this research. So, Mo, let's start with you. 

 01:10 

Thanks. So, I'm Mo Akuma. I'm a principal in the financial services and fintech practice here at L.E.K. I spend most of my time working with corporates and private equity on growth strategy and M&A. As a firm, we think innovation is going to dramatically change the way financial services are developed and delivered, and one of the key topics that we're focused on is embedded payments, which is the topic of conversation today. 

01:43 

Yes, great to be here. Thanks, everyone, for joining. I lead corporate development focused on private equity and venture capital partnerships within Global Payments’ integrated and platforms business. I started building out this initiative with Worldpay for Platforms before the acquisition. Background-wise, I spent the early part of my career working in investment firms and then focused on scaling new BD ventures across tech and fintech companies. I've also operated as a payments leader and advisor to a range of PE and VC-backed companies, so I very much have an interest in this space. I've been working for about 15 years in fintech and payments. 

02:27 

Excellent, thank you so much for those intros, and thank you for taking the time to be with us today. So, with that, let's get into today's discussion. Just to set the stage, embedded payments within SaaS platforms have been a hot topic for a while now, and with good reason. The two of you both recently helped author a research report approaching this topic specifically from an investor's point of view. So, with that in mind, I'll open a couple of questions. First, why did you decide to tackle this topic from that angle right now? And second, who specifically is this conversation for? Jeff, I'll throw that to you first. 

03:02 

Great, thanks. A lot of research already exists from an investor perspective on which vertical software platforms to invest in, but nothing to date has really laid out a more data-driven, repeatable, practical playbook or set of diagnostics across the full range of payment models. Our goal today is to share this data-driven approach with investors who can actually operationalize these frameworks—not just high-level market commentary, but specific benchmarks, decision points, and frameworks that investors can use. So, if you're a value creation leader, a portfolio ops head, or even a member of a current, active investment management team, I'd like you to walk away with a clear view of where payments value could be left on the table within your current portfolio holdings—and what to do about it. 

04:05 

Just to add to that, one of the core ideas and messages behind the paper is that embedded payments is not a “set it and forget it” type of strategy. In order to drive optimal value creation, embedded payments needs to be a strategic decision that starts all the way at the top—at the board and executive level—and, for private equity firms, at the firm level, and then filters through to the portfolio. So it needs to be treated as a primary value creation lever, not really a byproduct of software growth. We'll talk a little bit about that value creation and how embedded payments helps with that later in the discussion, but I think today many platforms treat payments as a secondary revenue stream. Part of the effort around this space is to help close that gap in thinking. 

05:06 

Excellent. Thank you so much. So, the first question an investor may have is: which of the software platforms in my portfolio should I be thinking about in this context? Mo, not every software platform is a good candidate for deep payments monetization—so how should investors think about which of their portfolio companies are genuinely well positioned to capture embedded payments value? 

05:28 

So, when we think about that, it’s really around the question of whether the platform is a natural control point, right? Is it uniquely positioned? Are they already orchestrating things like scheduling, invoicing, customer interaction, and other financial activity? If the answer is yes, then that deep workflow integration creates that natural control point and makes embedded finance seamless and value-accretive. The trend is also expanding beyond vertical SaaS into ERP, procurement, and travel and expense as well. So, we’re seeing the concept of embedded finance filter more deeply across different types of platforms. From a best-fit perspective, we think about markets with recurring transactions, meaningful payment volumes, and a reliance on timely cash flow, as well as a need to reduce friction for their end customers. 

06:28 

Got it. Then, once you’ve identified the portfolio opportunities, the next question is the monetization model—how embedded payments can be monetized within a platform. As the report lays out, there are essentially models to choose from: integrated payments, managed PayFac, and full-fledged PayFac. So, could you talk us through the trade-offs and where the real value tends to sit? Jeff, I’ll start with you on this one. 

06:52 

Well, the good news is you can make money across all of these models or solutions, from integrated through to the full PayFac solution, but it’s important to note that they’re quite different operating models. I’d say over the past decade, many investors had big eyes and pushed hard toward the full PayFac solution—the right-hand side of the spectrum. That’s primarily because the take rate is going to be largest there, and the narrative for many investors and software platforms was to own the whole customer or merchant experience. However, as you’ll see in the report and the playbook, the data tells a different story. When we analyzed the operational aspects over the three-year growth trajectory, the full PayFac model doesn’t actually deliver quite the same outcomes as some of these other solutions. When you look at enterprise exit multiple values, the sweet spot we found is within this middle tier—what we call the managed PayFac solution. There are light, pro, and premium versions of that model, and we prefer the pro or premium version, where you can capture the majority of the economics without overloading operational complexity or the lift required to offer embedded payments from a go-to-market perspective. 

08:22 

And just to add to that, many private equity firms and payments companies are directionally familiar with the different types of monetization models, right? There’s always a tendency to try to move deeper into managed PayFac and sometimes full-fledged PayFac models because those drive greater margins but also require more ownership and risk. But as Jeff alluded to, the answer is not always the same for everyone. It’s not always about trying to move to the right and become a managed PayFac or a full-fledged PayFac. It’s really about selecting a model that fits where you are in your journey as a platform. That’s the real reason why we built the value capture framework using real data from platforms that are already embedding finance and payments—to demonstrate and provide benchmarks that people can use practically as they think about which monetization model is fit for purpose for their platforms. 

09:42 

That makes a lot of sense. Thank you. One of the practical tools you've devised from your research is what you call the value capture framework. Jeff, could you walk us through what it is and how a value creation team should actually use it? 

09:56 

Of course. The purpose of this value capture framework is really to help ISVs, software platforms, and investors decide whether their current payment model or solution is the right one—particularly as the platform is scaling in its payments journey. On the left-hand side, we assessed three stages of readiness in working with payments: early, intermediate, and advanced. We tied those to five concrete metrics that investors can look at and benchmark against. First, gross processing volume—the level of core processing on the software platform related to payment processing. Second, merchant activation—the level of merchants that are actually accepting payments within that software platform. Third, the target net take rate—these are the unit economics, a reflection of buy rates and merchant pricing. Fourth, payments team size—the level of expertise in going to market with an embedded or integrated payments solution from a team perspective. Think of this as full-time employees who are working with payments or even have payments in their title. And lastly, fifth, risk appetite. To unpack that a little more from an investor perspective, I’d say one of the most important pieces they go to immediately—or should—is the target net take rate, and looking at that progression and scale they might expect as they advance in readiness from early to more advanced stages. We typically see around 20 to 40 basis points in early stages, doubling to 40 to 80 basis points at the intermediate stage, and 80-plus basis points at more advanced readiness stages. Those are not directly tied to specific solutions—from integrated through to managed PayFac and full PayFac—but rather reflect the unit economics as you scale to billions of core payments processed on platform. What makes the framework unique, in our view, is that no one else has really put specific, data-backed metrics around this that give investors clear inflection points. Much of the existing research is qualitative. That’s where Worldpay for Platforms and Global Payments, working with L.E.K., bring a differentiated perspective. This is not a reflection of Worldpay or Global Payments’ specific partners, but the industry as a whole. Really, the decisive factors investors should evaluate with this framework are: what is the strategic focus for their embedded or integrated payments opportunity, what level of operational maturity the platform and its employees have in working with payments, and the willingness to take on more ownership, risk, and liability—as this is a regulated industry. So those are the key components of the value capture framework. 

13:13 

I’ll also add that this framework is essentially a diagnostic tool for value creation teams and portfolio operations teams. It lets you quickly assess whether the platform’s current model is fit for purpose or whether they’re potentially leaving value on the table. It also helps flag some of the operational gaps that need to be closed before a platform can credibly move to a higher-ownership model. So I think, as Jeff mentioned, this is one of the first times people actually have data points and benchmarks around this that are truly actionable for value creation teams and portfolio operations teams. 

14:05 

Thank you both so much. Your research included a dataset of almost 80 platforms across all three monetization models, and it showed a wide spread between the top performers and the rest. Put simply, what are the leaders doing differently than the laggards? 

14:19 

As I alluded to earlier, the first thing is that leaders treat payments as a board-level priority, with dedicated P&L ownership. Laggards, on the other hand, tend to treat payments more like a cost center run by IT or the finance organization. The next point is having a clear roadmap for evolving the model over time. We talked earlier about not having a “set it and forget it” mentality for embedded payments, which many laggards tend to do. Leaders, however, continuously monitor and evaluate, and when the time is right, move into higher monetization models and higher ownership models. The third point is building premium features around the core product. That could include instant payouts, analytics, or even a branded checkout natively integrated into workflows. And finally, having dedicated operational teams for payments—covering compliance and merchant support—really underpins all of this. So, when we look at leaders versus laggards, there’s a very clear distinction in what I would call operational excellence. It becomes less about the technology and more about how you drive operational excellence across the organization. The data bears that out. Managed PayFac leaders grew more than 240% on a compound annual growth rate basis in the first three years, versus 30% for laggards. We see similar types of results across full PayFac and integrated payments leaders as well. So there is a significant difference in the growth that leaders are able to drive relative to laggards, and most of that is underpinned, as I mentioned, by focusing on strategy at the top level and then driving operational excellence throughout the organization. 

16:40 

I’ll start across all three models, and my paramount point would be that disciplined go-to-market execution is really the key. Stronger operational performance is going to be driven by focus from a go-to-market team perspective across integrated, managed PayFac, and full-fledged PayFac models. Starting with integrated payments, what we typically see is that leaders in this segment ramp up more gradually. This is a reseller model, so the go-to-market motion is often handled by external teams, usually from a vendor perspective, rather than individuals within the software platform itself. Those teams may be generalists and might have some vertical-specific knowledge, but they will need training to identify and sell to payment-eligible merchants within that platform context. Next, managed PayFac. Here we see the fastest growth among all the solutions. That’s primarily because the go-to-market motion is driven by internal sales teams at the software platform level. These teams already have experience selling the platform’s core, often subscription-based offering, and then expand into payments. There may still be a learning curve—small or large depending on expertise—to activate payments across the merchant base, but these teams understand the nuances of their merchant base within a given vertical, whether that’s healthcare, field services, or professional services. So this is where we see the fastest growth from a go-to-market perspective. Lastly, full-fledged PayFac. Growth here is slightly more measured. While these platforms are running their own go-to-market motions, this model comes with greater control over risk and liability. As a result, businesses may scale more deliberately from an operational perspective. Additionally, there are higher staffing requirements, which naturally moderate some of the go-to-market expansion we see in this model. 

19:13 

Excellent, thank you so much. So, let’s talk about the bridge to enterprise value, because this is where the private equity audience really leans in. Mo, you modeled a representative vertical SaaS platform to show exactly how embedded payments translate into dollars at exit. Can you walk us through that? 

 19:32 

Sure. What we found from our research is that the market rewards platforms that own more of the financial layer. There are really two waves of this. The first is when you embed payments into a software platform, and the second is when you move from embedded payments to broader, multi-product embedded finance. When you look at valuation multiples for software-only platforms and compare those to platforms that embed payments—and then to platforms that embed multiple types of financial products, including payments—you see a premium attached to those multiples as you move from one stage to the next. So embedding payments can be thought of as a starting point, not an endpoint. Once you embed payments, you can extend into lending, cards, payables, and other financial products—each of which compounds the value story. For sponsors, the practical takeaway is that embedded payments can materially reshape the return profile of an asset over a typical hold period. 

20:49 

Yeah, from an enterprise value perspective, most of these platforms, as they begin their payments journey, are familiar with a typical software subscription model. That could be monthly or annual subscriptions as their primary value creation lever. When we talk about embedding payments in a deliberate and strategic way, those software companies and their investors are really driving a secondary revenue stream—which, in some cases, can even surpass the primary subscription-based revenue. The reason for that is the repeatability of payment processing transactions, as opposed to a monthly or annual subscription. So for investors, it’s really about fundamentally reshaping the investment thesis—raising the strategic ceiling of the asset by embedding payments. And as we’ll talk about later, there’s an additional lift from embedded financial solutions on top of payments as well. So when you get to an exit as an investor, you’re not just selling a software business or software platform—you’re selling a business with a recurring financial services layer. You’re effectively selling a fintech, not just an ISV, and buyers are paying a premium for that in enterprise value.  

22:16 

And in our paper, we do model a single-asset view of this value creation. That’s really underpinned by payments volume growth, software revenue growth, take rates, and some of the key metrics that investors track. These are based on data we’re seeing from many of the platforms we analyzed. When we model that, what we found and demonstrate is that embedded payments can credibly drive 50% of enterprise value over a five-year hold period—and that’s using achievable metrics for platforms, not even the top end of the range. So the idea is, if you focus on embedded payments and implement some of the practices we discussed earlier—making it a strategic, board-level priority and driving operational excellence—you can credibly achieve a 50% premium in enterprise value at exit relative to holding a software-only asset. 

23:43 

Got it. Thank you. One of the sharper arguments in your research is that sponsors should stop managing payments company by company and start treating it as a portfolio-wide play. Jeff, why is this so important? 

23:56 

Right. First, I’ll make the point that when we did this research—and in my experience working with many investors—it’s interesting that in this area of software-led embedded payments, there aren’t many investors working with vendors through master service agreements, or MSAs. These would be cross-portfolio, vendor-specific agreements that take advantage of the scale created by multiple software platforms leveraging payments across the portfolio. To tie this back to the value capture framework, you’re going to have different platforms at very different stages in their payments journey. Some investors are acquiring platforms that already have existing vendor relationships for payments. Some of those may be integrated payment solutions, others might be working with a light version of a managed PayFac model. As they apply the diagnostic tools and benchmarks we’ve outlined, they may determine that some platforms are ready to move to a more advanced version of managed PayFac, or even, in certain verticals like retail or restaurants, make the jump to a full PayFac solution. So within a single investor portfolio, you have assets at many different stages. Without a portfolio-wide view, you risk missing out on the scale advantages that are critical in payments. The opportunity with an MSA is to pool or aggregate processing volume across the portfolio, which enables better, more standardized commercial terms and buy rates with a focused set of vendors and partners. That, in turn, materially improves take rates and the unit economics we discussed earlier. This is why partner choice is so important. Most larger investors with diversified portfolios want vendors that can scale with them—for example, supporting platforms that are outgrowing a reseller model or a light managed PayFac setup and need to evolve over time. A one-size-fits-all solution from a vendor perspective is not necessarily the right approach. Some providers try to push every platform into a single product or solution, but based on my discussions with investors, that doesn’t always align with the value capture framework or optimize take rates. So ultimately, we’re advocating for a portfolio-wide strategy that allows investors to capture scale benefits and better outcomes across their portfolio companies. 

26:55 

Yeah, and just to add to that, the portfolio-wide approach does two things. First, it creates a repeatable and scalable framework for new investments through pattern recognition. You can take what you’ve learned from one portfolio company and apply it to the next. Second, it opens the door to cross-portfolio embedded finance opportunities that we talked about. Once payments are embedded consistently across the portfolio, sponsors have the foundation to start layering on lending, cards, banking products, and insurance at scale. I also think it’s important to consider how you preserve value at exit, because that’s a key question investors have. How do you maintain flexibility when you’re ready to exit an asset? In that context, you want to design more modular architectures with clear data ownership, especially if data is shared across portfolio companies. You should also think about transfer rights embedded into contracts. There are ways to structure these agreements so that you can cleanly separate a specific portfolio company at scale, even if you’ve been executing a portfolio-wide approach. 

28:32 

Yeah, great insights. Thank you. A theme that runs through this entire conversation is that picking the right monetization model is necessary, but not the only key decision. The partner you choose to execute with is just as important. So, what should investors be looking for when evaluating potential partners? Mo? 

28:52 

Sure. As you think about embedded payments—and even as you move through different monetization models and activate higher-economics models—you still need a partner that actively helps you drive adoption, increase share of wallet, and achieve the performance metrics that create value. So it’s critical to choose a partner with the capabilities to support you as you grow. Many software platforms, because they are not native to selling payments, often struggle when they begin their embedded payments journey. They know how to sell software well, but they don’t necessarily know how to sell payments effectively. So it starts there—making sure you have the right partner to support you throughout the journey, with the capabilities you need to succeed and scale. 

30:00 

Yeah, I’d add three points to what Mo said. First, don’t think of it as a vendor relationship—I would frame it as a partnership. You want a partner that can grow alongside your portfolio. We all know there will be future acquisitions and, ideally, successful exits from an investor perspective, so you want a partner that can provide additional support, enhance go-to-market execution, and scale as your platforms mature. Second, on scalability, you want partners that can provide the full range of solutions described in the playbook—from integrated payment reseller models through to various tiers of managed PayFac (light, pro, premium) and full PayFac models. Beyond that, the ability to support adjacent embedded financial services will become increasingly important. Ideally, the goal is to have a single relationship that can scale across every relevant software company in your portfolio. If that’s not viable, you may need payment orchestration or multiple provider relationships—which many advanced platforms are already using today—but a scalable partnership model is typically more efficient for investors. 

31:49 

Excellent points, both. Thank you so much. We’re nearing the end of our time together, but before we get to some audience questions, I’d like to close with a practical roadmap for a value creation or portfolio ops team leader who’s watching this and wants to put these ideas into motion. What are the steps? Mo, we’ll start with you. 

32:07 

Sure. I’d highlight three steps. First, create an asset-level plan. Map each portfolio company’s current economics, adoption patterns, and gaps. Leverage the data points provided in the paper and decide whether to optimize the existing model or shift to a new monetization model. Second, underwrite execution. Think about how to translate your strategy into a concrete operating plan with clear pricing, onboarding, compliance, and go-to-market requirements. Many of these elements tie back to what we discussed earlier around what differentiates leaders from laggards. Third, scale. Use that asset-level rigor to build a portfolio-wide approach. Prioritize the highest-impact opportunities, then replicate across current holdings and new investments. From there, think about how to expand beyond embedded payments into multi-product embedded finance opportunities. 

33:12 

I’ll add two points to what Mo mentioned. First, repeatability is key. As Mo said earlier, this is a practical, repeatable playbook for investors. In our analysis and work with investors, we’ve seen too many cases where payments are treated with a “set it and forget it” mindset—as if attaching payments is a one-time project for a specific platform. It’s not. It’s a go-to-market operating discipline that compounds over time, especially as investors expand their portfolios, add new holdings, and raise new funds. Payments, as part of an investment thesis, should be applied consistently across multiple platforms and investments. Second, owning the financial layer that comes with embedded and integrated payments is really the next frontier for value creation teams. This is about optimization. Investors who have already embedded payments have a head start on new revenue streams, but they’re not always focused enough on optimizing those streams. We mentioned this earlier with take rates not always matching the level of readiness, processing volume, and merchant activation for specific platforms. So payments provide a strong starting point, but true value comes from owning and optimizing the financial layer. 

34:46 

Excellent. Great conversation. Thank you both so much. In the time that we have left, I’d like to open it up to some audience questions. Just as a reminder, you can submit questions using the Q&A widget in the webinar viewer. While those come in, I do have a few to get us started. Mo, I’ll send this first one your way. For a platform that’s early in its payments journey—say, still on a referral model—what’s the single biggest mistake you see value creation teams make when trying to push them upstream? 

35:13 

I’d say one of the biggest mistakes we see is moving upstream too early. Trying to move from a referral model to a managed PayFac model before you’ve built the operational maturity needed to be successful can create real challenges. What often happens is that companies move into these deeper monetization models and then realize they’ve taken on more complexity than they can effectively manage. 

35:50 

Got it. Thank you. Jeff, we’ll send the next question your way. When a PE firm inherits a portfolio where every platform is already working with different payments partners, what’s the most practical way to start consolidating without disrupting the underlying businesses? 

36:04 

I think it’s important to avoid making this a portfolio-wide mandate from the outset. Some value creation teams try to implement a broad, cross-portfolio directive to consolidate vendor relationships, but I would recommend starting with a more diagnostic approach. Map out the unit economics, existing contracts with vendors, and the solution or product complexity across platforms. From there, identify one or two high-impact opportunities within the portfolio. These might be platforms already processing close to or above a billion in payments volume, with strong merchant activation but limitations in expanding into new addressable markets due to current vendor constraints. Those situations can emerge as high-impact opportunities where it makes sense to reevaluate the current relationship—whether through an RFP or by applying new evaluation criteria and potentially transitioning to a new partner. The key is to take incremental steps—focus on smaller, high-impact wins before attempting broader consolidation across the portfolio. This is especially important because many investors are either working with inherited vendor relationships from acquisitions or simply haven’t optimized their payments strategy beyond an initial “set it and forget it” approach. So starting with targeted improvements allows you to build momentum before pursuing a larger, portfolio-wide transition. 

37:41 

Great, thank you, Mo. We’ll send the next one your way. How should investors think about embedded finance adjacencies like lending, cards, and payables in terms of sequencing? Is payments always the right first step, or are there cases where you would lead with something else? 

37:57 

I’d say payments is typically a stronger control point relative to other products because it gives you a lot of data and visibility into the inflows and outflows of a business. That data then enables deeper analytics that underpin products like lending. So while payments is not always the first step, it is a natural starting point that opens the door to other embedded finance monetization opportunities. That said, it’s important to consider the needs and journey of the customer—or the customer’s customer in a B2X scenario—and determine where financial products make the most sense to embed. From there, you can decide the right sequencing of products. 

39:04 

Excellent. Jeff, another one for you. What does “leaving money on the table” actually look like in a portfolio company today? Are there telltale signs in the financials or KPIs? 

39:15 

I’d say it might seem obvious, but the first thing I would ask is whether there is true P&L ownership and revenue visibility when it comes to embedded or integrated payments at the platform level. You’d be surprised—there may be reconciliation and reporting tools, but if payments aren’t owned internally from a revenue perspective, you may not have clear visibility into your payments strategy. Second is misaligned pricing. Dynamic pricing is common today to address a broader range of merchants—being able to offer IC+ and other more flexible pricing models that scale from SMB to enterprise segments. In many cases, companies are still operating with flat, fixed pricing models, which can limit performance. That typically shows up in a third KPI: low attach rates. If you look at merchant activation and see a platform struggling to exceed 30% or 40% attachment, that’s a strong signal that pricing or other go-to-market elements may be off. So if payments revenue is not clearly visible at the operating level, if attach rates are low or inconsistent, and if take rates—the core unit economics—are lagging peers, those are clear signs that you’re under-monetizing embedded payments and need to optimize. 

41:01 

Excellent. We are almost at time, but before we wrap, I was hoping we could get one parting thought from each of you. Mo, we’ll start with you. If there’s one thing you want a value creation leader or portfolio ops head to walk away with today, what would it be? 

41:27 

I’d say elevate embedded payments as a priority, because it creates multiple value creation pathways. First, you can optimize within your current model through improvements in go-to-market execution and operational processes. Second, you can create value by ensuring your monetization model is the right fit—and moving into deeper monetization models when you’re ready. And third, you can expand beyond payments into broader embedded finance opportunities, which represents another wave of value creation. 

42:06 

Excellent. And Jeff, same question to you. 

42:09 

I’ll keep it simple. When working with investors, I would ask: where in your portfolio is payments still under-monetized or under-optimized—especially where you’ve been working with the same vendor for years? We often find disconnects there, and one of the most actionable near-term levers to drive enterprise value is reevaluating that setup. As Mo mentioned, optimizing your embedded payments stack is critical. The partnership model my team focuses on is built around working with investors and their portfolio companies to identify those opportunities and help bring them to life strategically. 

42:52 

Excellent. Mo and Jeff, thank you both so much. This has been a great conversation, and I know the audience is walking away with a clear blueprint for turning embedded payments into a powerful value creation engine across their portfolios. Thanks to all of you for joining us, and have a great rest of your day.