Q1 M&A Activity in the ARM Industry - Financial Buyers Active Again

Rockville, MD – Fewer transactions closed in Q110 than in the first quarter of prior years, but the total deal value was higher than last year, according to Kaulkin Ginsberg, the leading M&A and strategic advisory firm in the debt collection / accounts receivable management industry (ARM).

“Recovering economic and market conditions are beginning to have a positive impact on the value of completed M&A transactions in the ARM industry,” noted Mark Russell, Director at Kaulkin Ginsberg. “This increase in value can be attributed to strategic and financial buyers returning to the market.”

Six transactions closed in Q110 with an estimated total deal value of US$111 million. By comparison, there were 11 transactions in Q109 valued at $92 million. In Q108, there were 10 transactions valued at $462 million, which included one significantly large deal – NCO Group’s acquisition of Outsourcing Solutions, Inc. for $325 million.

Half of the Q110 transactions were either management-led buyouts or company acquisitions by an industry executive. The other half were completed by financial and strategic buyers, including the acquisition of Consumer Financial Services, LLC by Atlanta Equity Fund; the leveraged buyout of TRAKAmerica by H.I.G. Capital and Reprise Management Group; and the acquisition of Claims Compensation Bureau, LLC by Portfolio Recovery Associates.

“If the economy continues to stabilize and show signs of improvement, we expect to see more interest from strategic and financial buyers,” said Russell. “This is driven by two factors; investors have easier access to debt financing in a growing economy and there is greater certainty in the future financial performance of target companies.”

Looking ahead to the rest of 2010, Russell expects an increase in M&A activity, as owners who are thinking of selling or recapitalizing their businesses will be motivated to do so by year-end to avoid paying an increase in capital gains in 2011. However, he also expects a reduction in the number of transactions involving distressed ARM companies as compared to last year.

About Kaulkin Ginsberg
As the leading strategic advisor for the accounts receivable management industry (ARM), Kaulkin Ginsberg has completed over 130 M&A transactions valued at over $3 billion. For ARM service providers, services focus on analysis, growth, and exit strategies. For credit grantors, the focus is on optimizing receivables management strategies. Kaulkin Ginsberg’s media division is the worldwide leader in providing timely news and insight on the recovery of debt in all industries. Read more about Kaulkin Ginsberg at www.kaulkin.com.

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