NCO is Buying OSI - What Took So Long?

You had to be asleep for the past 24 hours to not hear that NCO is purchasing OSI. It is the buzz of the industry in much that same way that the Mitchell report is dominating sports’ headlines. My question is: What’s the big deal?  (The same question that I am raising about the Mitchell report but that’s another topic for another day) 

As someone who spends his life focused on mergers and acquisitions in ARM, I am not at all surprised that NCO is buying OSI. In fact, I want to know what took so long.

OSI emerged from bankruptcy back in 2003 majority-owned in large part by hedge funds. By definition, a hedge fund’s timeframe for an investment is very short, so they are typically looking to get out of their investments within 2 years. In an active M&A market like the one that has existed in ARM over the past 3 years, I am very surprised they waited this long to sell. 

Personally, I thought it was inevitable that NCO would eventually own OSI.  It is a large enough add-on that it moves NCO’s needle. It has complementary business lines such as Transworld Systems’ letter series directed toward small businesses and North Shore’s mail services. And the reality is that there are only a few industry players that are equipped to take down a company that has the size and complexity of OSI. NCO has distinguished itself as the proven leader in making acquisitions of this magnitude work having already purchased Compass International, Canada leader FCA, and RMA. It is interesting to note that the second largest acquirer of large collection agencies was, in fact, OSI. Small world!