AI Adoption, Legal Collections and Investor Demand Shape ARM M&A Market in 2026

M&A activity in the accounts receivable management industry remained active during the first half of 2026 as financial sponsors and strategic buyers continued pursuing collection agencies and creditors’ rights firms, while artificial intelligence increasingly factored into how buyers evaluate businesses.

Corporate Advisory Solutions’ first-half 2026 report found ARM transaction activity was somewhat softer than the unusually strong first half of 2025. Still, the market recorded a notable surge in add-on acquisitions, including a record 12 add-on transactions during the first quarter.

CAS expects strategic acquirers and sponsor-backed platforms to remain active through the rest of 2026 and into 2027. The investment bank also identified growing legal collection activity, elevated consumer delinquencies and the industry’s still-early adoption of artificial intelligence and machine learning as factors influencing the sector.

ARM M&A Remains Active Despite Softer First Half

CAS reported $925 million in trailing 12-month ARM M&A value across 35 transactions. Of that total, approximately $718 million came from add-on transactions and $207 million from platform deals.

Add-ons also dominated transaction volume, accounting for 27 of the 35 M&A transactions tracked by CAS. The firm’s data includes proprietary estimates and publicly announced transactions.

The pattern reflects continued demand from established operators and sponsor-backed platforms seeking acquisitions that expand geographic coverage, client relationships or specialized capabilities.

Across the broader tech-enabled outsourced business services market, CAS described conditions as favorable to sellers because demand from strategic and financial buyers is competing against a limited supply of high-quality businesses.

The report said companies generating more than $10 million in revenue may be particularly attractive when they have a niche focus, defensible market position, distinctive client base or geographic footprint and have not previously accepted institutional capital.

Private equity interest could remain substantial. CAS pointed to record levels of available investment capital, aging private equity funds approaching the end of their investment periods and uncertainty surrounding software and asset-heavy investments as factors directing financial sponsors toward outsourced business services.

Creditors’ Rights Firms Draw Investor Attention

Legal collections emerged as another significant ARM theme in the report.

CAS said it completed two creditors’ rights transactions during the second quarter as financial sponsors pursued what the firm described as a first-mover advantage in a fragmented law firm market.

That M&A activity coincides with greater use of litigation as a recovery channel. CAS said discussions with industry participants indicate legal collections are receiving increased attention, particularly from consumer debt buyers.

Higher average account balances have improved the economics of legal recovery, according to the report. CAS said the channel can offer higher liquidation rates as collection companies contend with continued fee compression.

Consumer debt lawsuit data presented in the report also showed 2025 filings increasing across several states examined by CAS. The firm expects legal recovery to continue gaining traction.

For ARM operators and creditors’ rights firms, the combination could have implications beyond collection strategy. Increased reliance on litigation could make established legal collection capabilities, state coverage and law firm relationships more important considerations in acquisition strategies.

AI Moves From Experimentation Toward Competitive Requirement

Technology is becoming another dividing line in ARM valuations and operating strategies.

CAS said the industry’s attitude toward AI and machine learning has shifted during the past three years from a wait-and-see posture toward active consideration of implementation.

Adoption nevertheless remains at an early stage. Data cited from TransUnion’s 2025 Debt Collection Industry Report showed 33% of respondents considering third-party AI or machine learning solutions in 2025, while 15% reported already using a third-party solution.

The report also highlights differences among segments of the receivables industry. Among third-party collection agencies, 32% were considering third-party solutions and 14% were already using them. For debt buyers, 41% were considering third-party solutions. Among law firms collecting debt, the figure reached 46%.

CAS expects implementation costs and the difficulty of integrating new technology into a compliance-focused environment to remain obstacles.

The firm also cautioned against viewing AI as a simple substitute for collection employees.

“It is also becoming increasingly clear that a successful ARM operation will require the right mix of AI/ML and human agents,” CAS said.

The report expects that balance to extend beyond staffing. ARM companies will have to determine the appropriate combination of internally developed and third-party technology along with domestic, nearshore and offshore labor.

For prospective buyers, those decisions could increasingly become part of due diligence. An ARM company’s technology architecture, implementation capabilities and ability to deploy AI without compromising regulatory compliance may affect its competitive position and attractiveness as an acquisition target.

Delinquencies Continue Supporting Placement Volumes

The M&A outlook is developing against a consumer credit environment that continues to generate collection inventory.

CAS reported U.S. credit card balances approaching $1.25 trillion, while the share of balances at least 90 days delinquent has risen above 13%, which the report identified as the highest level since 2011.

Approximately 7% of credit card balances have transitioned into serious delinquency during each of the past eight quarters, according to data presented by CAS from the Federal Reserve Bank of New York.

CAS expects elevated delinquency levels to continue supporting ARM placement volumes over the short to medium term. At the same time, the firm said consumers have remained comparatively resilient, aided by the labor market and continued payment performance on outstanding balances.

That creates an unusual operating environment for collection companies. Inventory remains plentiful because of higher balances and delinquencies, while liquidation performance has remained strong enough to support recoveries.

Technology and Scale Could Increasingly Influence ARM Valuations

For ARM owners evaluating an acquisition, sale or capital investment, the report suggests that traditional measures of scale are increasingly being considered alongside technology readiness, specialization and operational efficiency.

Smaller operators face rising workforce, insurance, technology and compliance expenses at the same time that fee compression pressures margins. CAS said those conditions could create unsustainable unit economics for some businesses and potentially force owners to pursue exits under unfavorable circumstances.

Companies with differentiated client bases, specialized vertical expertise, geographic advantages and defensible technology infrastructure could be better positioned as buyers compete for a limited pool of attractive assets.

The report also indicates that AI implementation alone will not determine which businesses succeed. CAS expects the competitive advantage to come from combining technology, human collection expertise, regulatory compliance, and an appropriate labor model.

For the ARM industry, that combination could increasingly determine both operating performance and what buyers are willing to pay.