With Jack Dorsey returning to Twitter as CEO, there are a lot questions around what’s going on at his other company, Square. The biggest of all of them is whether the company will go public or sell. Either way, all signs point to an exit.

Square remains adamant that Dorsey will not only continue to lead the company, but that it has no concerns whatsoever that his new responsibilities at Twitter will in any way affect operations at Square. That may be true for the moment, but that could change if Twitter’s search for a permanent CEO ends with Dorsey becoming that permanent CEO.

As for Square itself, there’s lots of speculation about the company going public (as there has been for some time), but this seems like a strange time to do it. Investors are likely to be wary of Dorsey’s split attention. Regardless of whether an IPO is imminent, chances are Square is looking for an exit.

Finding an audience

While Twitter has struggled with growing its user base, Square has suffered its own problems finding the right audience. When Square launched back in 2009, it brought credit card payments to a segment course merchants that found the price of point-of-sale services prohibitive or weren’t able to get a merchant account because their businesses were deemed too risky by banks and payment processors. Square allowed anyone anywhere to accept payments.

But instead of leaning into that business model, Square decided to use its connections to small merchants to make a consumer play. In 2011, it introduced both wallet and order-ahead services for consumers. Unfortunately neither of those services took off and both have since been shuttered.

Square hit especially hard times in 2014, when a scathing Wall Street Journal article said the company had lost $100 million in 2013 and was quickly burning through investor funding.

After that story came out Square decided to hone in on merchant services. It’s since rolled out a slew of back office applications for scheduling, analyzing business data, and managing inventory, plus a peer-to-peer payment system for customers and merchants. The company also launched a small business fund, Square Capital, that offers cash advances to qualifying businesses. It was a good business decision. Square reported processing more than $100 million in sales in a single day during the holiday season last year.

But it may have been too little, too late. While Square was focusing on making a consumer play, others in the payments space like PayPal and First Data were not only building their own versions of the Square mobile payment reader, they were also creating suites of back office software.

“By the time Square decided to abandon the consumer side of its business in 2014 and fill out its portfolio with new features and functions, the competition was much, much more intense and relationships with merchants much harder to garner,” writes Karen Webster CEO of Market Platform Dynamics, a consulting firm on platform-based payment systems. In a report on Square’s business, she says that competition has hurt the company’s ability to attract enough larger small businesses, potentially hurting its ability to drive profit. Larger small- and medium-sized businesses are critical to payment processors, because they drive profit. Payment processors often lose money on transactions below $30. If Square has a disproportionate number of clients whose average sales are low, it’s likely losing money, says Webster.

Square is also still playing its hand at the consumer-facing market with its acquisition of restaurant delivery apps Caviar and FastBite. However, it may be too soon to tell what kind of income these properties are generating for the company.

IPO or sale

While many have long suspected a Square exit, how Dorsey proceeds at Twitter may be a good indicator of the direction that Square ultimately takes.

Dorsey is neither confirming nor denying whether he’s in the running for the top spot at Twitter, which means he could potentially continue as CEO at Twitter. Of course, Dorsey could be the chief exec for both companies, but that seems unlikely, as others have pointed out.

If he does stay at Twitter and doesn’t continues at Square, I imagine that the latter might be looking to sell. With everyone from Apple to Google and even Samsung now in payments, there are plenty of companies who would probably be interested.

Some have mused that Twitter could buy Square, which would solve the CEO problem. While there could probably be some sort of play around getting small businesses selling on Twitter with Twitter’s new buy button or using Twitter to promote businesses, this seems unlikely to me. It would be a lot of work (read: too much) to bring these two worlds together. But with Square already playing with peer-to-peer payments both through its partnership with Snapchat and its Square Cash app, this isn’t impossible.

Dorsey might also really just be serving as an interim CEO at Twitter. If so, then a potential Square IPO could depend on how long Dorsey is leading both companies. As I said earlier, investors are likely to be cautious about investing in Square while its CEO is preoccupied with Twitter, so I doubt that it will start filing the paperwork to go public before a Twitter chief exec has been determined.

That said, reports from earlier today say that Square is very much exploring a public offering and may register later this year. But the report also said that Square is looking into filing a “confidential registration statement,” which would potentially allow the company to start fielding interest without drawing media attention. Of course there are always leaks, but this makes me think that Square is trying to cover itself in case it doesn’t draw enough investor interest. If a potential IPO doesn’t draw enough attention, Square will again be looking at a sale.

Dorsey could always just return to Square at the end of the quarter and everything will be as it was. However this shakes out, a Square exit is likely top of mind.

VentureBeat's mission is to be a digital town square for technical decision-makers to gain knowledge about transformative enterprise technology and transact. Learn more about membership.