How Hunstein and Tax Code Changes Are Impacting ARM M&A Market

Even the Hunstein ruling out of the Eleventh Circuit Court of Appeals will likely not be able to dampen enthusiasm for investors and others that are interested in merger and acquisition activity in the accounts receivable management industry, noted Michael Lamm of Corporate Advisory Solutions in the latest episode of “ARM M&A Deal Talk.” In fact, changes that are likely coming to the tax code may make it more advantageous for owners looking to sell all or part of their businesses to do so now rather than later, Lamm said.

“If you’re an owner of a company — a debt collection business or law firm or debt buyer — and you’re contemplating selling the business over the next three to five years, and if you could sell it at the capital gains rate that are in the 20s versus paying close to 40% maybe this time next year, it’s a pretty significant jump up in terms of how much you’re paying Uncle Sam at closing versus what you could do beforehand,” Lamm said during the episode. “So I think we’re gonna see a lot of deals being pushed to get done before yearend is my guess, unless there’s some major change, [such as] Congress not making the law change.”

Lamm said his office has been fielding calls from companies looking to buy or invest in letter vendors in response to the Hunstein ruling out of the Eleventh Circuit, and Lamm said they are advising companies not to make any rash decisions. “This has got to just simmer down for a little bit,” Lamm said. “The world isn’t ending, collections isn’t going to cease, there’s still going to be a process. Let’s just wait a little bit and see how things progress on the legal front, and that’s what we’ve been urging people to do is not go out and start buying print mail equipment or buying a letter vendor.”

EDITOR’S NOTE: Have you checked out AccountsRecovery.net’s Hunstein Resource Guide? It includes recordings of all Hunstein-related webinars and a list of all the copycat lawsuits that have been filed across the country.

If there is one constant in the ARM industry, it’s change. And even though there may be some scary changes on the horizon, the industry has always adapted and evolved, Lamm said. “I’ve been doing M&A and valuation work in this industry for close to 20 years now, and literally I’m just never surprised anymore with the things that are happening,” he said.

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