A report from M&A advisory firm Greenberg Advisors indicates deal-making activity in the accounts receivable management/revenue cycle management (ARM/RCM) space is off to a strong start this year.
The first quarter ended March 31 saw 12 deals, capping a 12-month period that included 50 completed transactions. Transaction value rose to $311 million in the quarter, up from $216 million in the year-ago period. Quarterly activity increase throughout last year and peaked in the fourth quarter, a trend for the last quarter of the year.
A large portion of the fourth quarter activity was a result of large debt buyers selling their entire portfolio. Several sellers jumped on a trend of aggressive debt buyers paying good prices for paper and that trend is expected to continue throughout this year.
In the U.S. activity was further boosted as sellers sough to complete deals before year-end to preempt a Jan. 1, 2013 hike in the federal capital gains tax, according to a news release from Greenberg Advisors.
Deal Tracker, Greenberg Advisors' proprietary database, indicates that the largest ARM/RCM M&A transaction in the first quarter was The EOS Group's acquisition of the debt collection arm of Spain's Banco Popular for $180 million.
Banco Popular was forced to sell the collection business to raise capital after failing a banking "stress test." "The sovereign debt issues that have roiled world markets are now acting as a catalyst for M&A," continued the release.
The deal allows The EOS Group to expand the company's footprint in Southern Europe as the transaction included a 10-year servicing agreement with Banco Popular.
Another large transaction in the first quarter involved the acquisition of iQor Holdings UK by publicly traded Capita PLC for $63 million. iQor Holdings UK was sold by U.S.-based iQor Holdings Inc., which spun it off to refocus its strategy away from contingency collections, and to concentrate on North America.
One other key deal involved FedFinancial Federal Credit Union selling its subsidiary CU Collections to a strategic buyer. CU Collections offers early-stage collection services to U.S. credit unions.