JG Wentworth on the Auction Block

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With JG Wentworth on the auction block there are all kinds of concerns in the structured settlement selling industry as reported by customers of Structured Settlement Quotes Inc. Only time will tell if those concerns are justified.

JG Wentworth, a financial services company that buys structured settlements—as well as annuities and lottery prizes—for cash, is expected to be put on the auction block later this month at a price that could go as high as $1 billion. It appears that JG Wentworth, itself, needs its cash now for reasons unknown.

According to reports published on August 1, 2012 in the New York Post, JLL Partners, the private equity owner of the company, which formally changed its name to JGWPT in July 2011, has reportedly enlisted the assistance of Deutsche Bank AG and Moelis & Co. to help with them with the auction.

Structured Settlement Quotes Inc. (“SSQ”), a company that pioneered the online Structured Settlement marketplace, has received several calls from people expressing concern about JG Wentworth’s potential sale and the impact that such a sale could have on their pending transactions with Wentworth. They are anxious as to whether JG Wentworth will still honor its commitment to their pending deals once the company is sold.

The concerns of those callers may be justified, according to Brad Jones of SSQ: "We have reports that some companies in the structured settlement secondary industry will inflate the present value purchase price in order to secure seller acceptance only to later cancel the deal prior to the court hearing due to lack of profitability. This bait and switch tactic creates market instability as well as seller anxiety. This is especially true in cases where sellers rely on their case completion in order to complete the purchase of homes and other big ticket items under contract."

SSQ condemns bait and switch tactics and refuses to allow any company with a history of such practice to bid for cases on the SSQ site.

The $1 billion price JLL is asking for Wentworth, which is headquartered in Radnor, Pennsylvania, is nearly 10 times EBITDA (earnings before interest, taxes, depreciation and amortization) which one source said could “give some prospective buyers pause.” Bids made for the company thus far have been rumored to be as much as 20% below the asking price.

Potential buyers for Wentworth include other buyout firms, banks and insurers. As of late September, eight private equity firms, including The Blackstone Group, Apollo Global Management and TPG Global had reportedly expressed an interest in buying the company. Because the company operates in an industry that is highly scrutinized, these firms are seen as more likely buyers than banks and other financial firms. Since the proposed sale is private, none of the parties, including JG Wentworth, Deutsche Bank or Moelis, have commented on the progress of the transaction, which Wentworth hopes to complete by the end of October.

Structured Settlement Quotes is America’s #1 Structured Settlement Secondary Marketplace. Visit us at http://www.structuredsettlement-quotes.com.

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Jeremy Biberdorf
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