Collector - March 2018 - 12
Deal Value on the Rise
($ in billions)
% of Acquirers
Source: Greenberg Advisors LLC
M&A Deals for Small to Midsize ARM Firms Soared in 2017
Sellers should consider building capacity and consent to communicate via technology.
his year promises to be a strong one
for mergers and acquisitions in the
accounts receivables management
industry given the current regulatory
environment and continued interest from
both financial and strategic buyers.
In 2017 there were 44 transactions
completed in the ARM space worth an
estimated $5 billion in enterprise value,
according to data from Greenberg Advisors
LLC. This reflects a 19 percent increase in deal
volume and value over the previous year.
In approximately 70 percent of the 2017
deals, the transaction value was less than $25
million, noted Brian Greenberg, founder and
CEO of Greenberg Advisors.
"This is promising for small and midsized
firms, including those that are performing as well
as those that may be experiencing pain points,
such as needing additional sales power or needing
more capital in order to achieve or maintain
compliance," Greenberg said. "They fulfill a
significant part of the overall M&A picture,
and the fact that deals with companies of this size
are so prevalent reflects the volumes of buyers
we interact with that seek these transactions."
More financial buyers entered the ARM
market in the first half of 2017 than in any
six-month period since the second half of
2011, according to a report from Greenberg
Advisors. This high level of activity wasn't evenly
distributed throughout the year, however, as
33 deals were completed in the first half of
2017 and only 11 were done in the second half.
Michael Lamm, managing partner of
Corporate Advisory Solutions LLC, cited
two main drivers of mergers and acquisitions
activity in 2017: upheaval at the Consumer
Financial Protection Bureau and the
potential for a market correction or credit
crisis, possibly involving the automotive or
student loan markets.
"Investors often want to acquire a position
before a correction to experience several
years of growth," Lamm said. "No one is
expecting a market correction like we had
in 2008, but even if it's half of what we
experienced during the Great Recession,
there is a substantial opportunity at stake."
Right now, the healthcare and financial
services verticals are the most active M&A
asset classes within the ARM space.
While collection companies are seeing
more interest from buyers, they still face some
challenges-chiefly, increased competition.
Sellers need to make sure they have a
"differentiated offering that will drive buyer
interest and result in a completed transaction,"
Greenberg told ACA International's Pulse
newsletter earlier this year.
Lamm believes collection agencies
looking to sell will need to have the
capacity and consent to communicate
with consumers via cell phone, email and
text-even if the agencies are not using
that technology today, due to unclear and
conflicting laws and regulations.
"I think there is a high probability of
those laws changing while Trump is in
power," Lamm said. "Revised laws and
regulation could open up the widespread
use of additional communication
technologies. If companies in our industry
aren't prepared to embrace this technology
to communicate with consumers in
a compliant fashion, they will have a
difficult time competing and surviving in