Private equity and joint venture firms are once again starting to make inquiries about buying mortgage banking companies, hoping to pick up bargains as nonbanks see their volumes slow.
But according to M&A advisors, another key issue for smaller firms is raising enough cash to meet the $2.5 million minimum sought by Fannie Mae, Freddie Mac, and the Government National Mortgage Association.
Mortgage advisory consultant Larry Charbonneau noted that this time around in the merger cycle "traditional bank buyers" are "few and far between."
Lately, he's been hearing from PE firms and venture capitalists. "There's a lot of interest in well capitalized firms with $10 million to $50 million in net worth."
Chuck Klein, managing partner of Mortgage Banking Solutions, Woodway, Texas, said he's having "two to three conversations a week" about M&A transactions.
Klein noted that he's currently working on four sales transactions, but could not discuss details because they have not closed. (For a full analysis of the M&A market see the Monday paper edition of National Mortgage News.)
