During my thirty year tenure in sales, sales management and leadership with organizations like Xerox, MCI and Fox/Paramount, I have seen my fair-share of mergers, acquisitions and even IPO’s. The resounding theme I noticed throughout the years with transactions like these—with each company and each industry—was the unknown. Will this work? Are the companies compatible? Are their values and cultures in line?
This got me thinking about the potential impact of recent activity in industries associated with auto finance.
Before addressing current mergers and acquisitions in my industry, let’s first discuss some history and trends in industries other than auto finance. Back in the 80’s, the hot industry was TV and radio advertising, where many individuals and companies (myself included) made a lot of money selling locally, regionally and nationally. Before long, the stronger stations began leveraging a second station in a market, creating what’s known as a duopoly. Laws permitted owners of companies to partner with or buy minority owned organizations to dominate a specific city or region. Shortly thereafter, these finely tuned duopolies multiplied and many of these entities acquired upwards of ten surrounding stations… creating massive monopolies.
Yes, these monopolies were great for business, but they undoubtedly hurt the quality of the finished product in a particular local market.
Similarly, in the 1990’s, telecommunication companies began to leverage one another’s networks. Small companies (CLECs, competitive local exchange carriers) used the local and long distance services of partners (ILECs, incumbent local exchange carriers) and re-sold them to their customers. When the ILECs realized they were, in essence, giving away millions if not billions of dollars, they began acquiring the CLECs at an extraordinary pace. Once again, the large companies like AT&T and MCI killed it and even small companies like mine, BTi, made more money than they had ever made and even mid-level employees made millions in the stock market.
Once again, this was great for business but the customer experience suffered leading to deteriorated customer satisfaction.
Today, we are seeing numerous auto finance companies, banks and even captives (not to mention the vendors that service these organizations) actively involved in M&A activity. For example, the following is just a partial list of M&A activity in our space during the last year:
- Clear Market, SGS and Transparency-One
- Consolidated Asset Recovery Services and Primeritus
- Location Services, Premier Adjusters, Inc., TCAR and RepoRoute
- First Associates and PFSC
As our industry moves forward, there will unquestionably be more consolidation. And only time will tell how these transactions will affect the bottom line….and, more importantly, the customer experience. I urge you to keep all of this in mind as you consider a loan servicing or call center partner.
Is your partner focused only on the bottom line like the examples from earlier decades I provided above? Or, are they fully committed to the customer experience, to complete transparency, and to leveraging talent, technology, analytics and stellar customer service for the benefit of clients?
In other words, are they committed dramatically changing an industry, one that is ripe for change, for the better? Simply put, that’s precisely why Servicing Solutions exists. We’d love to tell you more.