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M&A Activity Expected to Accelerate in 2010, 2011: Berkery Noyes

The slew of mergers and acquisitions (M&A) in 2009 launched a trend that will accelerate in 2010 and 2011, according to recent predictions by the investment bank ""Berkery Noyes."":http://www.berkerynoyes.com/


Lenders, vendors, and servicers in the mortgage industry will continue to embrace tactical acquisitions to shore up product lines, capture customers, increase market share, and ensure they are prepared for the next wave of forward moving originations, Berkery Noyes said. In addition, the bank believes further fueling M&A activity is the accelerating vendor movement towards becoming a complete end-to-end provider. For evidence of these trends, Berkery Noyes pointed to a few specific M&A transactions which closed in 2009.

""First American CoreLogic"":http://www.facorelogic.com/ acquired ""BasePoint Analytics, LLC"":http://www.basepointanalytics.com/, a merger consistent with First American's strategy of improving the fraud-detection process for its clients. ""Equifax Inc."":http://www.equifax.com/home/en_us acquired ""Rapid Reporting Verification Company"":https://www.rapidreporting.com/, enhancing its ability to provide mortgage-related employment verification services. ""ISGN Solutions Inc."":http://www.isgn.com/ acquired Loan Fulfillment Solutions from ""Fiserv, Inc."":http://www.fiserv.com/, enabling the company to achieve economies of scale and depth in the mortgage technology market by being more of a one-top vendor for all loan cycle requirements. Additionally, ""Wolters Kluwer Financial Services"":http://www.wolterskluwer.com/WK/ acquired


""Stormwater Research Group"":http://www.srgflood.com/, an acquisition allowing Wolters Kluwer to expand and strengthen its presence in the flood determination step of the mortgage lending process.

Also affecting M&A activity in the coming years are more stringent lending guidelines and regulations that are shifting the paradigm, increasing the need for compliance, fraud prevention, and risk-mitigating technology solutions, which are now the cornerstones of the mortgage process, Berkery Noyes said. In today's market, the burden of ensuring proper compliance moves to the point of sale rather than merely at closing and falls on all mortgage industry participants, the bank explained.

According to Berkery Noyes, compliance and auditing solutions were viewed by many participants as a ""like to have"" product offering and less of a ""need-to-have"" solution before the credit crisis. However, as compliance solutions are elevated to the need-to-have category, the bank said the focus on fraud prevention and risk mitigation has never been stronger.

Although the mortgage technology industry is still highly fragmented, Berkery Noyes anticipates continued consolidation over the next several years. According to the bank, the mortgage technology market , along with the winder financial services and regulatory/compliance solutions sector, will be among the strongest business segments in terms of M&A activity, leading the coming resurgence in mortgage technology industry consolidation.

As a result of these trends, Berkery Noyes expects M&A activity to be bolstered by two main drivers in 2010, including further acquisition of compliance, fraud prevention, and risk mitigating solutions; and acquisitions of niche mortgage companies, as larger vendors seek to offer fuller end-to-end solutions. Driven by strong buyer demand, the bank expects transaction volume to accelerate over the next 12 to 18 months, but it does not expect a pricing bubble like the one experienced in 2006 to 2007.

About Author: Brittany Dunn


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