A Look Inside the Heads of Encore’s Board

—by Patrick Lunsford, CollectionIndustry.com

With the announcement yesterday that Encore Capital Group’s Board of Directors is exploring strategic options to “unlock value for shareholders,” many in the industry have been wondering what’s going on in the minds’ of the large public companies in the ARM industry.

NCO Group is poised to sell their shares to their CEO and go private. West Corporation, with a large ARM arm, is also going private. So is this a trend?

Mark Russell, Director at ARM consulting and M&A advisory firm Kaulkin Ginsberg Company, says not necessarily. It is somewhat of a coincidence that they all announced the moves within a couple of weeks of each other, and each deal must be looked at separately. West, for example, is a move prompted by the company’s majority shareholders, Gary and Mary West, to liquidate their holdings.

When asked specifically about the Encore move, Russell had this to say:

“After experiencing almost a 50% decline in share price since the beginning of this year, it's no surprise that the Board is considering strategic alternatives. While having access to the public markets offers clear advantages for capital intensive companies like Encore, it can also provide unfortunate disadvantages for the shareholders if Wall Street isn't happy with the company's performance. This has been Encore's bane for quite sometime, and while I agree with the Chairman of the Board's statement regarding the existence of unrealized value, it remains to be seen how this value will be maximized - through a recapitalization similar to West and NCO, or through an acquisition by another industry player. Either way, I believe this is the right decision for Encore and with the almost 15% increase in stock price since the announcement was made, investors seem to feel the same way.”