Every transaction that occurs in the ARM industry has its nuances: an agency that has substantial client concentration trying to come up with a fair market value of a debt buyer’s portfolio of charged off credit card paper, trying to figure out how collection licenses will convey post-closing, etc. Despite all of these nuances — along with the recent spike of regulatory hoopla where our industry made the front cover of the Wall Street Journal due to time-barred debt — transactions are still getting done. And it should be noted that our industry just came off of another very active year in M&A; 40 ARM transactions that represented $1.33 billion in deal value.
Our team started off the New Year with the announcement of a small deal out of Michigan where we advised the Nitzche family, an ACA member, on the sale of their business to RDK Associates, an agency based in Troy, Mich.
We expect to see many more of these RDK-like transactions in 2012 where other agencies who want to grow will expedite that process by acquiring competitors in their local/regional markets. As result, we will continue to see more consolidation with small and mid-size agencies. We also expect much more activity on the debt buying front, where debt buyers are merging with other debt buyers to increase purchasing and financing power to fight off credit volume scarcity.
Our team released last week our Q4 2011 M&A Report where we provided stats on M&A activity in 2011 as well as our predictions for 2012. I expect another strong year as the lending market continues to loosen and buyers search for businesses where they can make add-on acquisitions to grow their existing platform or simply a platform that offers up an attractive investment thesis and substantial growth opportunities. The vertical markets getting the most interest from buyers today are ARM firms that are playing in the government, student loan and medical asset classes.
This will undoubtedly be another roller coaster year from an M&A perspective with a lot of mergers among the small and mid-size ARM firms, high profile domestic and international transactions and new private equity and strategic entrants.
Let’s meet up. I will be heading out with Mike Ginsberg and Mark Russell to the DBA International conference on February 7-8. If you plan to be there, I would love to meet up and chat about the market and the trends we see unfolding in 2012. Here is a link to the conference if you haven’t registered yet – http://www.dbainternational.org/events/annual-conference/2012/index.html
Michael D. Lamm advises owners on their growth and exit strategies for Kaulkin Ginsberg’s Strategic Advisory team. Michael can be reached directly from Kaulkin Ginsberg’s Philadelphia, PA office at 240-499-3808 or by email.