Investing in debt portfolios?
Take the “stress” out of buying distressed debt
In the spring of ’07, Astra Business Services, a contingency collection agency, made the strategic decision to start buying debt portfolios. Early forays into the world of debt purchasing were overwhelming. Where are the best sources of inventory? How do you project potential revenues from looking at a debt portfolio? What is the right size, date of charge-off, and geographic distribution of their ideal portfolio? What else should they be looking out for? Worst of all, how were they going to make these decisions in the short time they had to submit a bid?
Atra’s management team interviewed several advisors for portfolio valuation service, but realized they needed a level of consultation beyond merely arriving at a fiscally feasible purchase price. They needed a partner who could help them successfully manage the process.
Astra chose Kaulkin Ginsberg to advise them on their debt portfolio acquisitions, as we have a proven track record in debt portfolio valuations, combined with over 16 years of strategic advisory expertise in the ARM industry.
After gaining an understanding of Astra’s business model, our experienced team assessed several portfolios that Astra had identified. For each one, we conducted a detailed analysis and stratification of the portfolio based on many factors presented in the file, and then advised Astra how the portfolio would fit within the company’s current operation and how they should work the paper if it was purchased. We recommended a suitable price range based upon current market conditions and communicated to them a price that was too high for them to meet their internal cash flow projections and financial goals.
In one instance, Astra stopped bidding on a portfolio on our advice. Walking away from the deal was difficult, as Astra’s investor was interested in putting their money to work, but Kaulkin Ginsberg provided the credibility to back up the decision as prudent.
The end result of our ongoing valuation work was that Astra successfully identified and purchased a portfolio and is still in the market for additional paper.
“I would not have engaged in this process without having someone provide the expertise,” noted Joe Costello, Astra’s Executive Vice President. “It’s too complicated a business and there’s too much money on the table. I’m very satisfied with the results I’ve gotten from Kaulkin Ginsberg.”
What can we do for you?
If you are looking to grow your company, we can provide the advice, expertise, and information you need to make the best decisions. From buying debt portfolios to identifying companies for acquisition, we offer a full array of advisory services to support your growth strategy, with a proven track record of creating successful ARM transactions.
Contact Mike Ginsberg, at 240-499-3800 or by email to discuss your interests in confidence.
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