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We at CAS are proud to present our Q3 2016 newsletter, which offers deal statistics and market trends we have been tracking for the Accounts Receivable Management (ARM), Customer Relationship Management (CRM) and healthcare Revenue Cycle Management (RCM) industries.
Despite all of the rhetoric and drama surrounding the Presidential election, merger and acquisition activity within the OBS sector has remained fairly robust in 2016, and the level of interest among both buyers and sellers suggests that this level of activity will continue into 2017.

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Within the publicly traded RCM sector, one transaction closed in the third quarter of 2016. Huron Consulting Group, Inc. (NASDAQ: HURN) acquired HSM Consulting Group to widen the size and scope of their service offerings in the healthcare sector. Other key takeaways from the quarter include: Accretive Health Inc. (NASDAQ: ACHI) indicated the need to invest in physician RCM, value-based reimbursement, and patient engagement due to the amount of ongoing change in the healthcare industry such as customer M&A activity, the shift to value based reimbursement models, and increasing regulatory complexity.

Below are some additional noteworthy transactions that took place in the RCM sector in Q3 2016:

  • MedData, a subsidiary of MEDNAX, has completed its previously announced acquisition of Cardon Outreach, a leading third party RCM service provider to enhance MedData’s RCM service programs.
  • TransUnion, acquired Healthcare Revenue Technologies, Inc (RTech) to boost their healthcare business and further maximize reimbursements for healthcare providers.
  • VEGA Medical Professionals, an RCM company focused on hospitals and independent physician groups was acquired by Constellation Healthcare Partners (LON:CHT), to expand into the Northeast US markets. The deal has a maximum consideration of $24 million including earnouts.

Within the publicly traded CRM sector, four transactions were closed in the third quarter of 2016. Convergys Corporation (NYSE: CVG) completed its acquisition of buw, a German service provider for call centers and business process outsourcing. This transaction expands Convergys’ global footprint, making them the second largest outsourced service provider in Germany. Teleperformance SE (PAR: RCF) acquired LanguageLine Solutions, the leading provider of over-the-phone and video interpretation solutions. Teleperformance believes this acquisition will create a 10% yearly accretion to earnings per share on a pro-forma basis for 2016. Atento SA bought a majority stake in R Brasil Soluções, a Brazilian collection services company specializing in retail, telecommunications, and financial services. This was a strategic plan to expand Atento’s end-to-end collection capabilities. Atento also sold its Moroccan operations to Intelcia Group to focus on its core markets in Spain and Latin America.

Other key takeaways from the quarter include: TeleTech Technologies (NASDAQ: TTEC) indicated the shift to technology by diversifying the solution

portfolio with technology enabled and outcome driven services to increase their strategic relevance to clients in the market place.

Below are some additional noteworthy transactions that took place in the CRM sector in Q3 2016:

  • Denstu Aegis took a majority stake in Merkle, the United States’ largest independent agency for CRM, digital and search. This acquisition assists Dentsu Aegis goal of becoming a 100% digital economy business by 2020 as well as enhance global operations.
  • Minacs was acquired by Synex (NYSE: SNX) and will be integrated into their Concentrix Business Segement to provide more scale and further serve its client base.
  • Relia, one of the largest CRM in Japan has come to a definite agreement to acquire SPi Global’s CRM business in the Philippines, United States and Nicaragua to complement their global footprint.

The ARM Regulatory Update is the CAS quarterly Newsletter feature focused on government news, regulation and compliance so you are informed of the latest activities of government agencies with oversight over the ARM sector. Your comments and suggestions are welcome!

Consumer Financial Protection Bureau (CFPB)

CFPB Notices of Proposed Regulation:

CFPB Mortgage Servicing Rule Amendments Published in Federal Register

The CFPB Mortgage Servicing Rule Amendments have been published in the Federal Register. Most of the provisions are effective on October 19, 2017. The provisions related to successors in interest and periodic statements for borrowers in bankruptcy are effective on April 19, 2018. The published servicing rule amendments can be found here.

The CFPB’s accompanying FDCPA Interpretive Rule is also now published in the Federal Register. As with the servicing rule amendments, the provisions are generally effective on October 19, 2017, and the provisions applicable to successors in interest are effective April 19, 2018. The published interpretive rule can be found here.

CFPB Reports and Updates:

2016 Annual Report of the CFPB Student Loan Ombudsman. The Dodd-Frank Wall Street Reform and Consumer Protection Act established a student loan ombudsman within the Consumer Financial Protection Bureau. Pursuant to the Act, this annual report analyzes complaints submitted by consumers with student loans from Sep. 1, 2015, through Aug. 31, 2016. This report highlights debt collection and servicing problems plaguing the federal programs designed to help defaulted student loan borrowers get on track and into affordable repayment plans.

CFPB Publishes Updated Versions of Small Entity Compliance Guide and Guide to Forms

The CFPB has posted on its TILA-RESPA implementation webpage updated versions of its Small Entity Compliance Guide and Guide to Loan Estimate and Closing Disclosure Forms. The updates focus on various guidance provided in recent TILA/RESPA Integrated Disclosure (TRID) rule webinars provided by the Bureau.

CFPB receives unprecedented level of comments on payday, title and high-cost installment loan proposal

The comment period for the CFPB’s proposed rule on Payday, Title and High-Cost Installment Loans ended Friday, October 7, 2016. Borrowers in danger of losing access to covered loans submitted over 1,000,000 largely individualized comments opposing the restrictions of the proposed rule and individuals opposed to covered loans submitted 400,000 comments

Department of Labor (DOL)

****Overtime Law Goes into Effect on December 1, 2016****

Key Provisions of the Final Rule: The Final Rule focuses primarily on updating the salary and compensation levels needed for Executive, Administrative and Professional workers to be exempt. Specifically, the Final Rule:

Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South ($913 per week; $47,476 annually for a full-year worker);

Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally ($134,004); and

Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.

Full Rule can be found here: DOL, Overtime Final Rule, May 2016

Internal Revenue Service (IRS)
The Internal Revenue Service plans to begin private collection of certain

overdue federal tax debts as early as spring of 2017 and has selected four contractors to implement the new program.

The new program, authorized under a federal law enacted by Congress last December, enables these designated contractors to collect, on the government’s behalf, outstanding inactive tax receivables. See full story and report here.

The House Financial Services Committee

October, 2016: Court Ruling Means Executive Orders Now Apply to CFPB. House Financial Services Committee Chairman Jeb Hensarling (R-TX) notified CFPB Director Richard Cordray in a letter that a recent federal court ruling means the Bureau must now follow executive orders requiring agencies to ensure the benefits of their proposed regulations outweigh the costs.

Financial Services Committee Chairman Jeb Hensarling (R-TX) released the following statement on the federal court ruling that the structure of the Consumer Financial Protection Bureau (CFPB) is unconstitutional. Hensarling Statement on CFPB's Unconstitutional Structure

Details of The Financial Choice Act

CAS Resource Links:

CFPB, October, 2016 Annual Report of the CFPB Student Loan Ombudsman.

CFPB, October 2016, Guide to Loan Estimate and Closing Disclosure Forms.
CFPB, October 2016, Small Entity Compliance Guide
CFPB, September 2016, Monthly Complaint Report, Vol. 15
CFPB, July 1, 2016 Semi-Annual Report of the CFPB, October 1, 2014-March 31, 2015
CFPB, Regulatory Agenda, Spring 2016
CFPB, April 2016 Online Payday Loan Payments
CFPB, April 2016, Student Loan 'Payback Playbook'
CFPB, March 2016, Winter Supervisory Highlights
CFPB, March 2016 Annual Report on Fair Debt Collection Practices Act
CFPB Report on Private Student Loans
DOL, Overtime Final Rule, May 2016
FTC, EU-U.S. Privacy Shield Framework, July 2016
FTC, Fair Debt Collection Practices Act
FTC, Memorandum of Understanding between the CFPB and the FTC, March 2015.
IRS, Internal Revenue Service Affordable Care Act
Office of the Comptroller of the Currency, Risk Management Guidance
Protecting Personal Information: A Guide for Business.

CAS – Corporate Advisory Solutions © 2016
2 Logan Square 100 N. 18th Street, Suite 300 Philadelphia, PA 19103
2 Wisconsin Circle, Suite 700,
Chevy Chase, MD 20815