2007 M&A Activity in the ARM Industry Reaches Nearly $1 billion

Merger and acquisition activity in the Accounts Receivable Management industry (ARM) has maintained a fast pace through the second quarter, exceeding last year’s results year-to-date.

According to Kaulkin Ginsberg, the leading strategic advisory firm that tracks the ARM industry, there have been 25 transactions with a total estimated deal value of roughly $910 million this year. The first two quarters of last year saw 28 deals with an estimated total deal value of $790 million, but 2006 went on to set a new industry record of $3.1 billion for the year.

“It wasn’t until the fourth quarter of last year that the new deal value record was set, largely due to two major private equity transactions with an estimated ARM deal value of $1.625 billion,” said Michael Lamm, Associate at Kaulkin Ginsberg, referring to the management-led buyout of NCO Group, and the recapitalization of West Corporation. Lamm added, “This year, we expected to see more strategic and financial buyers enter the ARM industry, or add-on to their current investments, and that is exactly what is taking place.”

The largest transaction of the second quarter occurred in May, when West Corporation purchased one of the biggest privately owned ARM firms, Omnium Worldwide, for $150 million. Other significant transactions included the purchase of a 25 percent stake in Encore Capital Group (NASDAQ: ECPG) by investors from J.C. Flowers & Co. and FPK Capital; the $64 million purchase of ARM agency Creditors Interchange Receivables Management, LLC  (Creditors Interchange), by Debt Resolve, Inc. (AMEX: DRV); and the $55 million purchase of Nationwide Credit Inc., Atlanta, Ga., by Ocwen Financial (NYSE:OCN).

“This is still a very active M&A market,” noted Lamm. “Given our knowledge of activity in the pipeline along with several pending deals, we expect the current pace of transactions to continue throughout the rest of the year.”

Kaulkin Ginsberg is the parent company of insideARM.com.