M&A Activity Gains Momentum as We Head into the Second Half of 2010

Well, you may be happy to know that the entire world has not become completely fixated on where Lebron James will play next season. Merger and acquisition activity in the debt collection and ARM industry continues to gain momentum as we head into the second half of 2010.

A little over a month ago we announced the sale of Bureau of Collection Recovery (BCR) to Aditya Birla Minacs (“Indian BPO Giant Acquires US Collection Agency BCR,” June 3) and earlier this week Receivables Outsourcing (ROI), headed up by Chris Wunder, purchased Arc Group (“Receivables Outsourcing, Inc. Announces Acquisition of Arc Group Associates,” July 8).

We are pleased to have initiated both of these transactions and served as advisor to the teams at BCR and ROI. Going into the second half of this year, we are seeing increased momentum on the M&A front in the ARM industry which is directly attributed to several factors:

1. Improved economic outlook
2. Increased corporate profits and large cash reserves held by large corporations and private equity firms
3. Signs that the credit markets are beginning to open up
4. Expected increase in capital gain taxes in 2011
5. Less distress and improved financial performance among target companies especially among industry specialists

Concerns exist on the following fronts:

1. Inconsistent liquidation performance results as unemployment remains high
2. Changes in regulation including FDCPA, CFPB, TCPA and healthcare/student lending reform
3. Actions from various states’ Attorneys General
4. Reduction in loan originations among large credit card issuers and how this is impacting placement volumes

Please join us next week at the ACA’s Annual Conference as we host an Owners Workshop and cover this important topic. Yes we can discuss where Lebron ends up too.