Real Estate Technology

Dear Clients and Friends:

Please find here our latest report on the values and m&a trends in the Mortgage Tech industry during the Covid-19 Pandemic.

Over the past few months, we have witnessed “business as usual” dissolve in a way that would have once been inconceivable. This year started with tremendous promise, as home sales and mortgage refinancing volume reached record levels. Values of Mortgage Tech firms followed suit. In February, we released our debut report on m&a values and trends in the Mortgage Tech industry, which you can view here. Then the world changed.

In March, as COVID-19 spread, governments mandated lockdowns, tens of millions lost jobs, and some lending institutions scaled back. Suddenly, everything about home purchasing became more challenging. Sellers got uncomfortable with having strangers in their homes and prospective buyers were equally reluctant to venture out. Applying for a mortgage, title insurance, property insurance, closing the purchase and moving all became problematic. US residential sales dropped 8.5% in March; April was worse. In New York City, where we are headquartered, April residential sales plummeted 61%. New listings were 88% below a year ago.

But now we think that we are beginning to see some light at the end of the tunnel. According to a recent survey by the National Association of Realtors, housing demand may have started to bounce back from the COVID-19 impact. A slow reopening of parts of the country combined with very low mortgage rates and continued demand from millennials is certainly part of the reason. But the process is also helped immensely by the adoption of technology.

Our debut report highlighted some of the trends that are driving Mortgage Tech including increased willingness by institutions and purchasers to use technology for more parts of the process, from online applications and underwriting approvals through financing and closing. The increased acceptance of outsourcing by lenders, and regulatory changes also help.

As you will see in our latest report, m&a values in the Mortgage Tech industry have taken a hit along with the rest of the market.  But, in our view, it won’t last. Our latest report focuses on what this current dislocation means in the short term and the opportunities it offers. Among other things we discuss:

• Government efforts have been rapid and vast to shore up various constituents such as mortgage lenders and servicers
• Homeowners, who are unable to make mortgage payments are getting some relief, with a suspension on foreclosures and evictions
• The “new normal” would help differentiate the strong from the weak by showcasing platforms that were designed around resiliency and sustainability
• The opportunity for forward thinking companies to leverage innovation such as Blockchain, AR/VR and AI, as they align with the new normal, and accelerate opportunistic consolidation

Our full report is here.

Please feel free to reach out, we would love to hear from you and share our insights on what we are witnessing in the markets and how that relates to your platform.

Marlin & Associates is one of the most active investment banking and strategic advisory firms providing trusted counsel to worldwide buyers and sellers of middle-market firms that offer enterprise and vertical application software, services, data and analytics – including firms that offer Fintech, Payments Tech, Mortgage Tech, WealthTech, InsurTech, BankTech, LegalTech, GRC, Business Intelligence, and Market Intelligence. Over the course of 18+ years we have advised more than 200 companies in 27 countries. Over the past 12 months we have advised on 14 successful m&a transactions including the recently announced sale of Strands. When you are ready, we would be pleased to discuss how we may be able to advise your firm.

Kind regards,

Aalap