Union Home Mortgage (UHM), headquartered near Cleveland, announced its acquisition of Houston’s Nations Reliable Lending, also known as NRL Mortgage. NRL Mortgage closed $1.091 billion in lending in 2024, which will add to the $7.6 billion in lending UHM closed last year. Congratulations to both parties!
In general, Garth Graham and the M&A team at STRATMOR have their eye on trends in the mortgage industry. Do changes in rates change the trajectory of deals being done in mortgages? The trick is that the lower rates don’t necessarily impact everyone equally, so companies may not get the benefit they expected who were counting on a big bump from lower rates… Maybe a bump that is the difference between staying the course and selling out.
Any merger or acquisition looks at the product mix, and purchase versus refinance percentages. As Garth said, “Refinances don’t necessarily spread like peanut butter”: they do not equal for all originators. In addition, one area that has plagued deals in the past from seeing the best results is culture. Is a lender or bank merging with another lender or bank that you’ve been competing with, and despising, for decades? Is there too much “history” to make it work, even if the financials and footprints work perfectly?
Lenders and banks may have differences from others in operating structure, hierarchy, dictatorial management vs. more open styles, pay structures and other factors. Here too, candidates should evaluate things very carefully before jumping into the pool, if success is to be truly achieved over the short and long term.
Meanwhile, STRATMOR is very active in confidential M&A, and the team told me that the pace of deals in 2025 remains very high and may exceed 2024’s.
As always, timing is tricky, and Garth mentioned that the time it takes to get a deal done can vary widely depending on the complexity and emotions involved and the speed at which the parties engage. He told me, “Of the last dozen deals we have done, the timing has ranged from two months from start to finish, to over one year to get the deal done. Asset sales are faster, while stock sales take longer, so it depends on the needs of the buyers and sellers and what works best. But I warn potential sellers not to WAIT too long to engage in the process, even if you hold to pull the trigger. For example, we have deals in process where the parties have worked together for months (getting to know each other, share financials) and now are finalizing terms.”
The other key item is to be very careful about premature disclosure. Garth adds, “We are super careful about the NDA and non-solicitation process, and also with ensuring that the potential buyer signs a blind NDA before they know the seller’s name.”
And the final item from STRATMOR. “We try to do a lot of financial due diligence in advance, so the buyers and sellers go into the process with a full understanding of the financial synergies. After all, there is a lot of potential savings in back office and corporate expenses for the right acquisitions, so getting down to detailed analysis of those expenses is key to be done BEFORE the offer is made, not wait until due diligence.”
“We did multiple deals in 2024, and all had upfront premiums with solid earn out. Often the premium being paid is driven by the ability for the seller to add the production without having to add all the corporate expense, so it can be painful decisions about the corporate departments (secondary, HR, Risk, technology etc.), but the end result is that the production is worth more to the buyer than it is to the seller due to the cost savings. And that shows up on premium offers. And the seller gets the balance sheet plus a share of that financial benefit. So, it can be a potential win-win.
(Anyone interested in learning more should talk to David Hrobon or Garth Graham.)
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