STRATMOR Group is a leader in providing middle-market merger and acquisition (M&A) advisory services to both buyers and sellers. Over our corporate history, STRATMOR Group has participated in well over 100 mortgage company transactions. Requests for our M&A services arise in many contexts and at various times in a mortgage company's life-cycle. Many companies, for example, reach a point in their development where it makes sense for them to acquire or merge with a similar sized originator so as to achieve scale benefits in both revenues and expenses.
Mid-size lenders also frequently approach STRATMOR Group to explore selling to a larger lender --- typically a bank owned or affiliated lender --- that can offer them scale economies, advanced technology, compliance expertise, access to a servicing portfolio and, especially important these days, the stability and survivability that comes with having access to both an inside warehouse facility and a sophisticated capital markets operation. Another motivation for selling arises when an owner-manager plans to retire.
Our mid-size M&A focus also enables us to serve large lenders that wish to acquire smaller or mid-size lenders. Frequently, their objective is to establish an immediate presence in a market in which they do not currently originate mortgages. For bank-owned lenders, this can be especially important in target markets where they are planning to establish a retail banking presence.
When working with potential sellers, we help them not only with the many steps and tasks involved in a sale but also, and perhaps more importantly, with evaluating their strategic decision to sell. What are the client’s sale objectives? In light of these objectives, is this a good time to sell in view of current market conditions? What sale value would the company command in the current M&A environment? What deal structures are most feasible? What investor segments are actively seeking acquisitions? How compatible are the cultures? What operational improvements should be considered that might improve both the prospects for a sale and the company's value?
STRATMOR Group is uniquely positioned to help potential sellers answer such questions because of our long term experience and resulting deep understanding of the market, mortgage company valuation skills, knowledge of and about potential buyers and our ability to diagnose areas in which operational changes could significantly improve a company's market attractiveness and value.
When representing a buyer, while we are often called-in after a potential transaction has been identified, we typically conduct a pro-active seller search aimed at identifying and qualifying potential sellers that meet a pre-established "profile" collaboratively determined by STRATMOR Group and the buyer. Again, because of our extensive relationships within the industry, we are highly successful in identifying attractive "targets" for the buyer --- targets that both fit the profile and are willing to consider a sale. Often, such targets are companies that were not actively considering a sale at the time they were approached by STRATMOR Group.
The people risks inherent in any mortgage banking M&A transaction are especially critical because of the pivotal role of transitioning the production sales force to new ownership. If the sales force walks out the door, the value of the company goes with them. This is not just an issue for the buyer, because so many mortgage banking transaction involve a substantial earn-out component of the total consideration. Thus, whether we are representing buyers or sellers, our top priority is to foster transactions where the personal chemistry and cultural compatibility between the parties is positive and sustainable.
For more information about our M&A services,
contact us today.