Strong Mergers and Acquisitions Activity Continues in Second Quarter
August, 06th 2016
The growth includes activity in the accounts receivables management and healthcare revenue cycle management sectors.
Mergers and acquisitions in the accounts receivable management industry continue to be strong based on activity in the second quarter of 2016, according to ACA affiliate member company Corporate Advisory Solutions in its latest newsletter.
The mergers and acquisitions growth follows a strong first quarter and includes activity in the healthcare revenue cycle management and customer relationship management sectors.
“Through June 30, deal value in the [outsourced business services] sector totaled $7.69 billion and comprised of 46 announced deals. Second quarter deal value totaled $2.65 billion and consisted of 21 announced deals,” the company reports. “Deal value in the second quarter increased approximately 104 percent year-over-year and the number of deals rose 75 percent.”
CAS notes that the strong activity is in contrast to the broader mergers and acquisitions market, which has seen a decline during the past two quarters.
The accounts receivable management sector has an approximate market size of $14.1 billion and is expected to grow at a compound annual growth rate of 1.5 percent between 2016 and 2021, CAS reports based on data from IBIS World.
“As unemployment declines and the housing market continues to strengthen, recovery rates for ARM service providers will improve. Household debt and outsourcing services are also projected to continue growing, both of which will support sector growth as outstanding debt levels continue to rise.”
Growth in the healthcare revenue cycle management sector is also expected over the next five years. Its current value in the market is $20.5 billion and it is estimated to be $40.4 billion by 2021 with a CAGR of 12 percent, according to the newsletter.
“The anticipated growth is largely driven by the consolidation of healthcare providers, a reduction in overall healthcare costs, and decreasing reimbursements.”
CAS reports the addition of diagnosis codes for healthcare providers through ICD-10 will be another influence in the healthcare revenue cycle management sector.
The Consumer Financial Protection Bureau’s proposals for debt collection rulemaking will also influence merger and acquisitions activity, according to CAS. “Each of the sub-sectors within OBS has seen increased M&A activity as regulation pushes smaller companies toward merging with, or selling to, larger players.”