Residual Market

Seller Due Diligence: Prepare a Portfolio for Review

Seller preparation should make the acquired interest understandable and the records consistent. A buyer needs to trace proposed earnings, identify the rights being offered and see the unresolved questions. A large collection of files is not useful when the totals conflict or their purpose is unclear.

Residual Market guidance · Updated October 25, 2026. Examples are fictional and explain the method. They are not completed transactions, market benchmarks, an appraisal or a purchase offer.

Prepare a controlled first-pass summary

Describe the sale scope, monthly residual range, merchant-count range, broad geographic and industry mix, processor relationship, reason for considering a transaction and preferred timeline. Use non-identifying information for the initial conversation. State whether the proposed scope is an economic interest, operating assets or a company.

Do not put merchant names, account numbers, processor credentials or unredacted statements into the public inquiry. Residual Market does not provide a confidential document room. Confidentiality terms, recipients and a secure exchange need to be arranged separately.

Make financial totals traceable

Use one index connecting each schedule to source records. A monthly earnings bridge should show reported residual, adjustments and received earnings. Explain timing differences rather than forcing every receipt into the statement month.

Record who prepared the schedule, when it was prepared and whether it has been independently reviewed. Keep management-prepared figures distinct from audited or externally verified information. If the earnings depend on the owner’s ongoing work, show how that work would continue.

• Consistent month-by-month residual statements and a reconciliation to receipts.
• A schedule of bonuses, corrections, deductions, reserves and nonrecurring entries.
• The seller’s share where another agent, ISO or partner receives part of the economics.
• Servicing costs and obligations needed to maintain the acquired earnings.
• Known unpaid amounts, disputes, offsets and potential clawbacks.

Show the original cohort and the additions

Define active merchants consistently. Show beginning merchants, losses, additions and ending merchants. Then build a separate earnings bridge for the beginning group. Ending growth can conceal substantial runoff in the original book.

Explain seasonal or dormant accounts and changes in merchant identifiers. Use consistent anonymous identifiers when an authorized reviewer needs to reconcile schedules. Concentration should use the same earnings basis and reporting period as the financial summary.

A statement that retention is strong is not a substitute for a definition and calculation. Distinguish merchant-count attrition, residual-revenue losses and changes among retained merchants. The metrics guide provides worked examples.

Create a contract questions register

Keep executed agreements, amendments and side letters together. Separate them from unsigned templates. A general description of an industry relationship does not establish the terms of the seller’s actual agreement. Mark an unknown as an open item rather than a representation.

• Which agreement creates the payment rights and who is the counterparty?
• What consent, notice, assignment or change-of-control questions apply?
• Which termination, pricing, servicing, setoff or non-solicitation provisions need review?
• Are rights pledged, shared with partners or subject to another party’s option?
• What happens to residual payments if the relationship ends or required services stop?

Document the operating handoff

List merchant support, equipment coordination, renewals, pricing conversations, reporting and escalations currently handled by the owner or staff. Identify software, supplier arrangements and open service issues. Assign an owner and completion evidence to each transition task.

Do not treat handing over the seller’s login as a transfer process. Access should be established through the relevant provider’s authorized procedures. Determine what records are needed, who can receive them and how previous access will be removed.

Use staged disclosure and an exception list

For each confidential disclosure, record the version, recipient, purpose, authorization and date. A summary, redacted schedules and identifying records serve different stages. NDA execution does not by itself settle all contractual, privacy or security obligations.

Check hidden spreadsheet tabs, comments, metadata and embedded identifiers as well as visible cells. Keep credentials and payment-card data out of transaction materials. Ask advisers which evidence is necessary for the current stage.

Maintain a list of discrepancies with an owner and next action. Missing amendments, unexplained adjustments and inconsistent definitions should be resolved or specifically disclosed before final terms. Record what remains conditional and who bears transition costs; a submitted profile does not guarantee a closing.

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