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I need a competitive landscape comparison of companies in the debt collector and debt consolidation space. Look at True Accord as one of the companies.
Hello! Thank you for your question about the competitive landscape in the debt collection and consolidation space. To sum it up, this industry is highly fragmented. I identified and compared the leading players in the industry: four companies with greater than 1.5% market share that TrueAccord will compete with directly.
METHODOLOGY
To reply to your request, I began by familiarizing myself with TrueAccord. Looking globally, I identified the other major players in the debt collection and consolidation industry based on revenue and market share. In order of market share, they are: Expert Global Solutions (EGS), Portfolio Recovery Associates Inc. (PRA), Encore Capital Group (ECG), and Iqor US Inc. Together, these four companies account for slightly less than 25% market share, which means the industry is highly fragmented.
INDUSTRY DEFINITION & COMPETITION
This industry is comprised of companies that pursue payments on debts owed. Most companies act as agents of creditors and render their services for a flat fee or percentage of the total amount owed. Other companies in this industry buy debt portfolios from creditors at deep discounts and then pursue outstanding balances for their own gain.
I included brief notes on each company below, and complete information in the spreadsheet you provided (new information is included on "Worksheet 2 - debt consolidation/collection").
TRUE ACCORD
TrueAccord is attempting to disrupt the debt collection and consolidation space using technology that both automates and personalizes the process as much as possible, increasing efficiency and recovery.
TrueAccord claims to be "without real competition" because they are the first to use machine learning (a proprietary technology they call HeartBeat) to send debtors communications that are "increasing relevant," thereby increasing effectiveness. They received $5M in a 2014 Series A fundraising round.
EGS is the largest collection agency, with over 42,000 employees and 120 offices spread across 10 countries (including the Philippines, India and Canada).
The holding company was formed in April 2012 as the result of a merger (NCO Group Inc. + APAC Customer Services). EGS services more than 200 Fortune 500 companies, conducting its business operations through its subsidiaries, which independently focus on different segments. The operating segment relevant to the debt collection and consolidation industry is the accounts receivable management branch, which focuses on the recovery of delinquent accounts. EGS is a private company and not required to report financial information, but ARM is estimated to account for 78.0% of total company revenue.
PRA was founded in 1996. Total revenue was more than $942.0 million in 2015. The company has more than 3,700 employees across 10 US states and the United Kingdom. The majority of industry revenue (more than 75.0%) is derived from operations within the United States.
The company's business model consists of discount purchases bankrupt consumer debt (including Visa, MasterCard, Discover and private-label credit cards), then earning a return on this debt by collecting a multiple of the purchase price. Other components of PRA's debt portfolio includes installment loans and deficient balances on legal judgments. In 2012, PRA acquired Mackenzie Hall and expanded its operations to the United Kingdom.
ECG was founded in 1953 and operates on a global scale, with locations in India, Costa Rica and the United Kingdom. Globally, the company has over 6,700 employees and revenue of $1.2 billion in 2015.
The company operates in two segments, portfolio purchase and recovery, and tax lien collections. In this business, ECG pays homeowners' tax liens for them in exchange for a payment agreement that is backed by a tax lien on the property.
In May 2012, the company acquired Propel Financial Services LLC to bolster their tax lien acquisition business. In 2013, ECG acquired Asset Acceptance Capital Corp., which helped grow its portfolio and recovery business.
Iqor provides debt collection, accounts receivable, and customer service services to its clients, which include clients in the financial, retail, automotive and telecommunications sectors. The customer relations division provides call center management services, payment systems and back-office processing.
The company operates about 40 call centers in North America and Asia. Iqor sold its UK business in 2013.
CONCLUSION
To sum it up, there are four major companies in the debt collection and consolidation industry that True Accord will compete with directly. Combined, these four companies account for less than 25% of total market share, which means concentration in this industry is low.
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