$1.5 Billion in Total Transaction Value -- New Record Set In Accounts Receivable Management (ARM) Industry
Kaulkin Ginsberg announces 4th straight year of increased transaction value
Bethesda, MD (PRWEB) February 7, 2005 -- 2004 became the record-breaking year for total M&A and public market transaction value in the Accounts Receivable Management (ARM) industry, with over $1.5 billion changing hands in 54 transactions -- surpassing the previous $1.2 billion record set in 1999.
Strategic and financial buyers like Sallie Mae, Convergys, West Corporation and Parthenon Capital were key drivers of M&A activity in 2004, attracted by the strong profit margins and growth trends inherent in large and well-managed companies within the debt collection and debt-purchasing sector. Industry players like MedAssist and Aktiv Capital were also making acquisitions to expand their geographic footprints and servicing capabilities.
The public markets continued to react positively to ARM companies, most notably debt purchasers like Asset Acceptance (NASDAQ:AACC), which executed a successful IPO in February.
Company (Stock Symbol) % Price Increase in 2004
First City Financial (FCFC) 65%
Encore Capital (ECPG) 61%
Portfolio Recovery Associates (PRAA) 57%
Asta Funding (ASFI) 55%
Asset Acceptance (AACC) 17%
NCO Group (NCOG) 15%
Looking ahead to 2005, Mike Ginsberg, President & CEO of Kaulkin Ginsberg Company, expects M&A activity in the ARM sector to remain strong. Many factors are coming into play that might make 2005 an even bigger year for transactions. The industry is recouping the costs of offshoring and technological innovations, which raise operational efficiencies and profitability. A strong economy, growing consumer debt levels and the receptivity among creditors to place or sell receivables have also contributed to the overall interest in making acquisitions or investments in the industry. Add to that the successful IPOs of 5 major ARM firms, and the industry taking a higher profile among many types of investors."
According to Ginsberg, We continue to see interest in U.S. debt collection agencies from parties outside of the industry and outside of the country as they realize the tremendous synergies that exist." Kaulkin Ginsberg recently advised on a deal between Indian BPO firm ICICI OneSource (a unit of ICICI Bank Ltd, NYSE: IBN) and U.S. based collection agency Account Solutions Group, marking the first time an India-based firm has acquired a collection agency to establish a US presence. For well-managed debt collection agencies with strong growth rates and blue chip credit grantor clients, we expect continued interest from buyers that offer an offshore solution and have backing from a large financial or strategic partner," said Ginsberg. Debt purchasing companies will also continue to draw interest from the financial and strategic buyers that seek to enter this sector or expand into particular market segments."
About Kaulkin Ginsberg Company
Since 1989, Kaulkin Ginsberg has provided solutions to accounts receivable management and other business services industries. Through the SAGE program (Strategic Analysis, Growth and Exit), they work with owners and executives in their efforts to grow or exit their business. Services include merger, acquisition and valuation advice, research, growth and operational consulting as well as training and executive search services.
Kaulkin Media publishes CollectionIndustry.com(TM) (http://www.collectionindustry.com) and Credit & Collection Daily(TM) (http://www.collectionindustry.com/newsletter), and is the most popular source of industry information. Kaulkin Partners brings the latest technology to creditors and collectors. Read more about Kaulkin Ginsberg at www.kaulkin.com.
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