1Q06 M&A Activity in the Accounts Receivable Management Industry Consistent with 1Q05 Results

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Kaulkin Ginsberg anticipates M&A activity to remain high in 2006 following last year’s record-breaking results.

M&A activity in the Accounts Receivable Management (ARM) industry is off to a similar start in 2006 as compared to 2005, with 8 transactions completed totaling roughly $128 million. The same quarter last year generated 12 transactions totaling approximately $110 million in deal value.

According to Mark Russell, Director at Kaulkin Ginsberg Company, "We are not surprised by the level of deal activity in the first quarter of 2006. 2005 also started off comparatively slow, but ended up being another record-breaking year. The market characteristics that drove last year's deal activity are still in place – the economy is strong, lenders are providing debt with attractive terms, corporations and investment funds have large amounts of capital to put to work, and the appetite for outsourcing debt collection activities is growing."

Russell anticipates that deal volume will increase in 2006, but the average transaction size may decline as more deals involve larger companies buying smaller ones that strategically expand their presence in the ARM market. "Buyers with established platforms in the ARM industry will look to grow by purchasing companies that provide access to growing niche markets and complementary service offerings."

While most first quarter deals involved industry buyers, financial and strategic buyers also were active in the ARM market. In January, an undisclosed investor purchased a minority stake in Hilco Receivables, LLC, one of the largest debt purchasing companies in the U.S. Additionally, in early March, ClearLight Partners, a private equity firm based in California, financed the acquisition of Midwest Collection Service, Inc, a leading health care focused contingency collection agency, by its portfolio company The Outsource Group.

Looking ahead to the remainder of 2006, Russell expects continued acquisition activity from all types of buyers. "In the current cycle, many strategic, industry, and financial buyers are looking to acquire ARM companies with strong management, attractive clients and substantial growth potential."

About Kaulkin Ginsberg Company

Since 1989, Kaulkin Ginsberg has provided solutions to accounts receivable management and related business services companies. The Strategic Advisory Group provides merger, acquisition and valuation advice; operational consulting; and executive search services. The Research Group produces industry-specific publications and custom research products. The Kaulkin Ginsberg family of companies also includes Kaulkin Media, publisher of the most popular sources of industry information such as CollectionIndustry.com(TM) and Credit & Collection Daily(TM), and Kaulkin Information Systems, provider of secure and affordable document and process management technology. Read more about Kaulkin Ginsberg at http://www.kaulkin.com.


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