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» VISIT US ONLINE @ DSNEWS.COM 67 If the merger strategy is not effectively and quickly communicated to all the employees, low morale will start to creep through the ranks of the impacted companies, resulting in work disruptions, loss efficiencies, or even unachieved sales, because the employees— concerned about their job—will start to look for and accept employment elsewhere. 67 COVER STORY INDUSTRY INSIGHT INDUSTRY INSIGHT industry organizations. Compliance and legal requirements dealing with legislative adherence are simply overwhelming for many companies to deal with on their own. e Great Recession, caused by the toxicity of specific pools of loans known as sub-prime loans, prompted the U.S. federal government to enact major financial reforms, such as the Dodd-Frank Act and the Volker Rule. is type of legislation, although well intended, has literally put many companies out of business due to the cost of meeting the requirements set forth by this financial legislation. Many startups are formed with the end objective of selling their firms once the company hits a certain financial performing target. Mortgage broker shops, title companies, product/services specific vendors, and small local banks are the types of companies typically looking for a larger suitor to acquire them. Larger, financially stable conglomerates, that have an objective of expanding their own market coverage or product diversification goals might be interested in acquiring a smaller company for strategic purposes. Selling a company is not easy. A track record of at least five years of consistent growth through market expansion, maintaining cost controls, and earning a strong reputation for being a prudent, viable company are milestones that are typically required before a company can even be considered to be sold at a premium price. Mergers and acquisitions are not always successful, and the processes bring risk to all companies involved. e case of Countrywide Financial, for example, which was purchased by Bank of America, is a great study of risk not being correctly forecasted within market conditions. is situation, combined with legal and economic outlooks, can have a dramatic, dire impact on a company's balance sheet for years to come after the acquisition. Employees of both companies express fear, anxiety and uncertainty when those companies are merged or acquired. When Concentric Equity Partners merged both Mortgage Contracting Services (MCS) and AMS together, it appeared to be a strategic move to grow immediate market share. However, almost three years later, MCS appears to be the sole-standing entity of that merger. As history has shown in our industry, it doesn't matter if the company is acquiring or being acquired, the employees understand that certain departments will be merged or phased out, which in turn means job cuts. If the merger strategy is not effectively and quickly communicated to all the employees, low morale will start to creep through the ranks of the impacted companies, resulting in work disruptions, loss efficiencies, or even unachieved sales, because the employees— concerned about their job—will start to look for and accept employment elsewhere. Overall, the mortgage industry's merger and acquisition activities can been classified as positive. Once the dust settles after an M&A has taken place, the new company is typically positioned to achieve their overall objectives associated with the M&A strategy. A new company name might appear in the industry. New products and services could be offered to a broader customer base by the newly formed (combined) company, or the new company could be completely re-engineered taking the best practices from each and folding them into the new organization. For multiple reasons, M&A strategies do present new opportunities and new directions for everyone involved.

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