Third Quarter M&A Deal Value in the ARM Industry Shows Robust Market

In the third quarter of 2011, the number of mergers and acquisitions in the accounts receivable management (ARM) industry kept pace with deal activity during the same period a year earlier, but total transaction value well exceeded totals from Q3 2010, according to Kaulkin Ginsberg Company, the leading M&A and strategic advisory firm in the outsourced business services sector.

Ten deals were completed in Q3 2011, representing roughly $329 million in total deal value, a significant increase over the seven transactions and $134 million in total deal value produced during the same time period last year. For the first three quarters of 2011, the ARM industry generated a total of 27 transactions and $1.233 billion in total deal value, versus 25 transactions and $870 million in total deal value for the same period in 2010, a 42% increase in total deal value.

The international markets generated the vast majority of deal value, with nine transactions representing $1.1 billion of the total deal value for 2011 year-to-date. International M&A activity has been driven predominantly by financial buyers recapitalizing UK based ARM companies, including AnaCap Financial Partners’ acquisition of Cabot Financial, TDR Capital’s acquisition of Lowell Group, Towerbrook Capital Partners’ acquisition of CapQuest Group, Ltd., and Cyrus Capital Partners’ investment into Sigma Financial Group.

Noteworthy U.S. transactions include Avadyne Health’s acquisition of Revenue Cycle Partners, Waud Capital’s recap of Revenue Cycle Solutions (RCS), and Blackford Capital’s recapitalization of Key Health Medical Solutions, all of which were healthcare focused transactions.

According to Mark Russell, Director at Kaulkin Ginsberg Company, “The U.S. ARM market continues to attract buyers, but today strategic and financial buyers are predominantly seeking acquisitions in markets with organic growth opportunities. This means they are more heavily focused in healthcare, government services, and student loans than in other historically attractive market sectors. Industry buyers remain interested in all markets, but increasingly they are seeking complimentary add-on acquisitions to expand market penetration as opposed to platforms in completely new markets. With lenders continuing to show greater interest in financing quality transactions, we anticipate that M&A activity in the outsourced business services arena to remain strong throughout the rest of 2011.”

For more than 20 years, Kaulkin Ginsberg Company has been the leading M&A, valuation, and strategic advisory firm to the outsourced business services industry. For more information  contact Mark Russell, Director, via email mark@kaulkin.com or phone 240-499-3804.