NCO Group Backs Out of Deal to Acquire Legal Collector Axiant

Accounts receivable management and business process outsourcing giant NCO Group announced late Tuesday that it has terminated a proposal to acquire Axiant, LLC, a leading provider of legal collection services.

In late November, NCO agreed to acquire the Huntersville, N.C.-based Axiant (“Legal Collector Axiant Files Bankruptcy; NCO Group to Acquire,” Nov. 23). To facilitate the deal, Axiant filed for Chapter 11 bankruptcy protection.

Axiant was formed in 2007 through the consolidation of the non-legal operations of three large debt collection law firms in the United States – Mann Bracken, Eskanos & Adler, and Wolpoff & Abramson. The goal was to establish a national debt collection law firm, and at its peak Axiant’s geographic coverage included a majority of the U.S. population.

A spokesperson for NCO told insideARM that Axiant’s legal network was initially very attractive to the ARM firm.

“We were interested in the legal network aspect of the deal, similar to the TDM acquisition we did recently,” said Brian Callahan. “But we’re not going to proceed with the deal.”

In a press release announcing the deal in November, Axiant noted that the acquisition was subject to due diligence and other customary requirements before the expected first quarter 2010 closing. The deal was also to be subject to other bids at auction and approval by the bankruptcy court.

Kevin Keleghan, CEO of Axiant, told insideARM that any sale will still be subject to other bids and court approval. “The plan remains the same, but the potential buyer changes,” he said.

Keleghan explained that NCO was serving as a stalking horse in the sale proceedings. He says that there is a good chance NCO will be replaced by another lead buyer before the open sale process begins. Regardless, Axiant will still be going through an asset sale in the bankruptcy process.

“We were disappointed to see NCO drop out, but interest is extremely high,” said Keleghan. He noted that the company has received several serious inquiries recently from well-capitalized companies with ARM industry ties.