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Consolidating fragmented markets

MCS Group

Through accretive buy-and-build we have created one of the leading businesses in the mortgage property services sector.

Description

At the time of our ownership MCS Group (“MCS”), headquartered in Texas, USA, provided property-related services to mortgage lenders and servicers for newly originated mortgages and for mortgages in default. The business operated in all US states, providing title and closing, valuation, inspection, maintenance and preservation services for residential properties.

Transaction

Our original insight into the opportunity for MCS was generated from our analysis and then ownership of European headquartered VPS.

In 2009, whilst getting to know the VPS business, we developed an understanding of the US mortgage market, where mortgage defaults and repossessions were at an historical high and where the changing regulatory landscape was driving an increased outsourcing of functions by the large lenders.

Given our belief in the opportunity for growth in the US mortgage services market, after the 2010 acquisition of VPS, we refocused the company’s priorities and encouraged the aggressive pursuit of larger, national contracts in the US to grow its existing US business.

In October 2013, we completed the transformational acquisition of MCS in the US. Concurrently we separated VPS US from its European parent and along with MCS it formed the larger MCS Group.

The transaction was compelling from a number of standpoints, including synergies that were quick to implement and the businesses’ complementary customer bases.

What we did

We strategically repositioned the business, completing three add-on acquisitions thereby creating a more diversified mortgage services business with reduced customer concentration, increased product breadth and a balanced cyclical/acyclical exposure.

In addition, we grew the customer base through new contract wins and increased sales to existing customers, creating one of the leading businesses in the US property services sector.

How we exited

In April 2017, following a competitive process, we completed the sale of MCS Group to American Securities.

Further information

Date of investment: March 2010
Deal type: Private sale
Exit date: April 2017
Exit route: Financial buyer
Status: Realised

Visit the company’s website at:  mcs360.com