Oct 7 2007
Merger and acquisition activity in the debt collection/accounts receivable management (ARM) industry maintained a fast pace through the third quarter of 2007. The total deal value year-to-date is at $2.12 billion, representing 41 completed deals - consistent with high levels of deal activity over the last few years, according to Kaulkin Ginsberg, the leading strategic advisor to the industry.

"The recent liquidity crisis in the debt markets has not made any significant impact on deals in the ARM industry," noted Michael Lamm, Associate at Kaulkin Ginsberg. "There have been fewer deals, but they represent larger transactions, as strategic buyers are being competitive with financial buyers for smart investments," noted Lamm.

Significant deals in the third quarter include the acquisition of AllianceOne, with 2006 revenues of over US $115 million, by Teleperformance, enabling the global BPO firm to gain a foothold in the U.S. ARM market. Kaulkin Ginsberg served as advisor to Teleperformance on the transaction.

Firstsource Solutions, Inc., based in Mumbai, India announced it was acquiring MedAssist Holding, Inc. of Kentucky for US $330 million in late August. The acquisition, now closed, will provide Firstsource with an entry into the provider segment of the U.S. healthcare BPO industry.

And in mid-September, Sherman Financial Corp's management team paid $518.8 million for 37 percent of the equity to Radian Group LLC ($278 million for roughly 21 percent) and MGIC ($240.8 million for about 16 percent). This transaction provided these two shareholders with a partial liquidity event and allowed management to acquire a controlling stake in the company. Management now owns 54 percent of the company, and MGIC and Radian have retained 24.2 percent and 21.8 percent ownership stakes, respectively.

"It's too soon to know if volatility in financial markets will have a residual impact on transactions in the ARM industry," added Lamm, referring to the summer's credit crunch and the Federal Reserve's half-point cut in a key lending rate on September 18. "However, our knowledge of pending transactions in the market and the number of interested buyers out there suggests that we should continue to experience a robust level of deal activity at least into 2008."

About Kaulkin Ginsberg

As the leading strategic advisor for accounts receivable management (ARM), Kaulkin Ginsberg has completed over 120 M&A transactions valued at nearly $3 billion. For ARM service providers, our value-add services focus on analysis, growth, and exit strategies. For credit grantors, our focus is on optimizing receivables management strategies. Kaulkin Ginsberg's media division publishes the most popular sources of timely industry news and information such as insideARM.com(TM) and The ARM Insider(TM). Kaulkin Information Systems creates secure and affordable workflow, document, and business process management technologies. Read more about Kaulkin Ginsberg at www.kaulkin.com