ARM M&A Activity Cools Off in 2018, But Likely to Pick Up This Year: CAS Reports

One step forward, one step back. The pattern for merger & acquisition (M&A) activity in the accounts receivable management industry continued in 2018, according to data released by Corporate Advisory Solutions. There were 30 deals completed in 2018, worth a total of $3.4 billion, down from 40 deals worth $6 billion in 2017.

“In a 1948 speech to the House of Commons, Winston Churchill quipped one of his most repeated quotes: ‘Those who fail to learn from history are condemned to repeat it,’ wrote Michael Lamm, CAS’s managing partner. “At CAS, as always, we learn something new from every client project we engage in, however, with all due respect to Mr. Churchill, we wouldn’t mind repeating 2018 in many aspects. “

Nevertheless, CAS still classified the year as producing “strong results” and remained bullish on the industry’s prospects moving forward, according to the company’s quarterly newsletter.

“Interest in acquiring collection agencies and debt buyers continued in 2018, driven by improved financial performance and business trends,” the company said. “We expect this trend to continue in 2019.”

Among the trends that will drive activity in 2019 that were pointed out by CAS are:

• An increase in the amount of consumer spending, coupled with rising delinquency rates set a stage for more debt that needs to be collected.
• Issues and concerns about the growing amount of student loan debt and concerns about an uptick in unemployment rates could spell more delinquencies.
• The pending debt collection rule from the Consumer Financial Protection Bureau and a proposed rule from the Federal Communications Commission related to the Telephone Consumer Protection Act.

Within the revenue cycle management space, there were 39 transactions in 2019, representing a total deal volume of $2.4 billion, compared with 26 transactions in 2017 that accounted for nearly $10 billion in deal volume.

The evolving nature of the healthcare space will ensure that interest in the RCM sector will remain high in 2019, according to CAS.