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Investors Anxious For Proposed Collection Rule To Assess Impact on Valuations

Investors and entities that are looking to acquire companies in the credit and collection space are anxiously awaiting the release of a proposed debt collection rule from the Consumer Financial Protection Bureau so they can assess the impact that it will have on the valuation of potential acquisition or investment targets, Michael Lamm from Corporate Advisory Solutions says during the latest episode of the ARM M&A Deal Talk podcast.

Some of the expected areas that are to be covered in the proposed rule could impact the operations — and the valuation — of collection agencies, debt buyers and other companies in the space, Lamm said.

“Buyers, whether it is a financial buyer, a private equity firm, a search fund, or strategic investor are waiting to see what, if any, effect the proposed rule will have on company’s current operating models,” Lamm said during the episode. “If there is going to be a call cap, what does that mean? What is this going to do positively and negatively?”

The issue is not necessarily concerns about complying with the law, Lamm said, but more the impact on a company’s operations. Many investors are taking what Lamm described as a “wait and see” approach as everyone awaits the release of the proposed rule.

When the proposed rule is released and if it contains the different provisions that are expected, such as the use of more modern communication channels like text messaging and email, Lamm said that he expects a jump in technology investment in the ARM industry.

“It’s really a very interesting time,” Lamm said.

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