The number of mergers and acquisitions in the accounts receivable management industry cooled in the second quarter, compared to the first three months of the year, according to data tracked by Corporate Advisory Solutions, but that was to be expected after a record-setting first quarter. Even though the number of deals and deal value were half of what was recorded in the first quarter, the 10 deals worth $286 million struck in the second quarter showed that M&A interest remains high as the country emerges from the COVID-19 pandemic. In its comprehensive quarterly monthly insights newsletter, CAS predicted that there will be a “sustained upward trajectory in the number of M&A deals” in the ARM industry through at least the end of 2021 and into 2022.
CAS cited changes made by the Biden administration to the tax code as a primary driver for the projected increase in M&A deal activity. Additional taxes on individuals making more money and businesses will lead individuals in the ARM industry to consider selling their businesses to avoid paying higher income taxes, the company predicted. “Overall, the Biden’s tax plans would reverse the 2017 Tax Cuts and Jobs Act and could lead to a sweeping surge in M&A volumes as companies seek to ‘cash out’ prior to the implementation of the higher tax rates,” CAS wrote in its newsletter.
Overall, among the three industries tracked by CAS — ARM, Revenue Cycle Management, and Customer Relationship Management — the second quarter of 2021 was the most active second quarter in the past two years. Across all three markets, there were 60 deals closed during the second quarter, representing $6.6 in total deal value. While it marked the second straight quarterly decline dating back to the fourth quarter of last year, that was likely due to pent-up demand caused by the COVID-19 pandemic, which all but ground M&A activity to a halt during the first three quarters of last year.
