How Kaulkin Ginsberg Came to the ARM Industry 20 Years Ago

“It was 20 years ago today, Sgt. Pepper taught the band to play.”

For Kaulkin Ginsberg, it was nearly 20 years ago that one transaction taught our band about the accounts receivable management industry. Little did we know at the time the impact this transaction would have on our firm and the impact our firm would have on an industry.

As we celebrate 20 years of servicing the ARM industry, we will revisit the milestones that helped shape and define our firm’s history and the evolution of this industry.  Let’s get started by looking back at where it all began for us.

I am often asked how we came to focus on the ARM industry.  It started with a chance introduction in the spring of 1991when Marvin Kaulkin was contacted by a DC-based attorney about a local company that may be for sale.  The company was Eastern Credit, a profitable debt collection agency servicing regional healthcare and utility clients.  It was owned by two industry veterans, Mike Goldberg, former President of the American Collectors Association and Jerry Glazier, a well regarded owner/operator. The attorney was made aware of the potential sale by Myron Katz, a former owner who sold his collection agency and was looking for a DC based mergers and acquisitions advisor to work on this transaction.

A t the time of the introduction, our firm was a generalist M&A advisory firm servicing local DC based business owners who wanted to sell their companies.  Our clients included technology companies, government contractors, service businesses, and other local companies.  Eastern was the right company for us at the right time.   It was sizable enough to attract the interest of non-industry buyers and investors as well as larger agencies seeking to make an add-on acquisition in the mid-Atlantic region.  We got to know the business, the owners, and their needs.    We made introductions to qualified buyers and ultimately sold the company to one from outside the industry, an individual investor whose family made its money from the petroleum industry.  This investor acquired Eastern and a second agency owned by his neighbor in New York.

The sale of Eastern attracted the attention of other agency owners who wanted to know about this buyer from outside the industry and what was paid for the company.  We learned that, at the time, most collection agencies were sold to large industry buyers such as Payco American and FCA International who used their own “cookie cutter” structure that incorporated a significant payout based upon the company’s future performance.   The Eastern transaction was different and owners wanted to know about it.  We were happy to talk to the about it.

The sale of Eastern served as a springboard for our firm, transitioning us from being a local generalist into an industry specialist without limitations based on a particular geographic region.  We studied the ARM industry and learned it was poised for significant growth due to an increase in the amount of outstanding consumer and commercial debt, the anticipated expansion of government and business outsourcing, and expected consolidation taking place in various credit granting industries.

In the early 1990s, the industry was comprised of a handful of relatively large publicly traded agencies, a few large private companies and a few thousand small and mid–size businesses, many with the characteristics of Eastern.  We felt confident the ARM industry could become one of the business community’s key growth areas that would generate a significant amount of merger and acquisition activity as we entered the 21st century.  Over the next few years, we made a commitment to get to know the players, the marketplace and companies from outside the industry that wanted to acquire or invest in these businesses.

From that chance beginning we quickly realized that the ARM industry was a good place to call home.  We’d love to hear a story about how you or your company got its start in this industry.

Mike Ginsberg is President and CEO of ARM advisory firm Kaulkin Ginsberg. The firm is celebrating its 20-year anniversary in the ARM market.  Click the 20th anniversary logo at right for more information about Kaulkin’s 20 years in ARM.