As only the third CFO in Fleetcor Technologies’ 23-year history, Tom Panther has brought a fresh perspective to the Atlanta, Georgia-based global payments company since arriving in May.
An accountant by training with three decades of experience in payments and banking, Panther took the job partly because he believes his transactional expertise was a good fit for the fast-growing company.
“Certainly, the M&A experience is important to the role here, particularly since we’re an acquisitive company,” Panther said in an interview earlier this month, adding that he joined because he felt like he could have an immediate impact “right out of the gate.”
Dry powder
Fleetcor certainly has the dry powder to give Panther the runway to make his mark: The company, which pumped over $2 billion into mergers and acquisitions alone since 2017, spent $7.7 billion altogether including buybacks, aims to continue growing. They plan to deploy $1.2 billion or more in capital annually on accretive M&A as well as into buying back shares and paying down debt, according to a June company presentation.
But he will also be under some pressure to balance both sides of the transactional coin. In March, the company reached an agreement with the D.E. Shaw Group, an activist shareholder, to “refresh” its board and conduct a strategic review of its business portfolio by year-end. That process could entail separating parts of its business or a breakup, The Wall Street Journal reported.
Primarily a global payments operator, the sprawling company had a market cap of more than $19 billion after the market close Friday afternoon. While its revenues rose 10% to $948.2 million for the second quarter compared to the year-earlier period, its net income fell 9% to $239.7 million, largely due to higher interest expense, according to an Aug. 8 earnings release.
The strategic review comes at a tricky time for deal-makers. During the first half of 2023, the volume and value of global deals across a full range of sizes slumped 14% and 40%, respectively, undercut by rising interest rates and a gloomier outlook for the global economy, according to PwC.
The deal pendulum
Panther is confident the market is ripe for both acquisitions and the right sales. He disputes the view held by some that it is a buyer’s market. Despite the recent slump in the transaction market, Panther said it is currently a largely balanced market to both buy and sell in.
“Certainly valuations have come down but cost of capital has gone up. I would say overall those kind of offset each other,” Panther said, noting the valuations are deal-specific. “Has the pendulum completely swung in the buyer’s favor? If 24 months ago it was a seller’s market, I would say it’s relatively balanced now.”
Panther said the company is actively evaluating opportunities for adding to its three primary businesses, which the company groups into corporate payments, vehicle and mobility payments, and lodging. Its credit cards, apps and digital platforms help companies pay and manage their employee travel and business expenses, according to a spokesperson. That’s occurring as the company is also seeking to simplify its business. For example, he said it’s considering selling its prepaid gift card business.
In an Aug. 8 report on Fleetcor, Baird Equity Research analysts David Koning and Robert Bamberger suggested that trade could be a good one: it views the company’s acquisition strategy as a positive, noting “it has made 75+ acquisitions since 2002 and has executed very well.” At the same time, it sees gift card revenue “lumpiness” as a negative factor.
Classic CFO roots
The 54-year-old Panther started out in the classic training ground for finance chiefs as a CPA on the audit side of the now defunct Arthur Andersen and went on to SunTrust Banks, where he held various roles including controller and chief accounting officer before taking the CFO seat at EVO Payments in 2019. At the Atlanta, Georgia-based EVO, Panther worked on international M&A, debt and capital financing and was an advisor to the board on the $4 billion sale of EVO to Global Payments.
Always keeping his eye on the details is how Panther said he has approached his career — whether it be M&A or running a company. His auditor experience, and the “healthy skepticism” that cultivates, also informs how he handles deals. Panther advises that same caution for other CFOs who may be considering transactions.
“Make sure you get a good understanding of the company,” Panther said, noting that you also have to be willing to walk away if you don’t like what you find. “You’re going to own it one day and you better make sure you understand what you’re buying.”
