D+H Acquires Avista – Continues to Aggressively Build Lending Solutions Business

Last week, Davis + Henderson (D+H) announced that it had acquired Avista Solutions, Inc., a leading provider of Software as a Service (SaaS) mortgage loan origination software to community banks and credit unions in the United States. D+H paid approximately $40 million at a rumored multiple of greater than 10.0x EBITDA.

While the deal is not large, it signals that D+H is both betting big on the turnaround of the U.S. mortgage market and is serious about becoming a leader across the mortgage value chain both in Canada and the United States. As a point of reference, in 2006, only 10% of D+H’s revenue was derived from lending solutions. Today, it represents greater than 50% of its business.

The acquisition of Avista adds to D+H’s customer base and expands the range of solutions D+H offers to the North American financial services industry by complementing the SaaS consumer point of sale (POS) mortgage origination platform it delivers to more than 1,100 U.S. banks and credit unions through its acquired Mortgagebot subsidiary.

The increasingly complex regulatory environment and strong need for effective risk management is leading mortgage industry participants to seek out more comprehensive technology solutions. Given this increase in demand from clients, we expect to continue to see M&A activity in the loan origination software segment as vendors increasingly look to build out end-to-end solutions. Earlier in 2011, D+H acquired Mortgagebot for $230 million at a multiple of greater than 6.0x revenue and 11.0x EBITDA. Additionally, Ellie Mae acquired Del Mar Datatrac (DMD) for $25 million.