Captive Finance Company: Portfolio Acquisition
When market conditions are right, a bank or finance company can be opportunistic in the acquisition of portfolios of loans as opposed to originating them directly.
CFC desired to grow assets in excess of the abilities of its field offices. They decided to acquire assets through acquisition but lacked the tools to evaluate the acquisitions, price them appropriately, conduct a due diligence, and successfully integrate the assets.
Why Goff Associates, Inc. (GAI)?
GAI is experienced at identifying opportunities and quantifying their risk. GAI also has experience negotiating large and complicated agreements.
GAI worked with CFC’s Operation Research Department to develop a method of assessing the quality of the portfolio under consideration. GAI then accessed its contacts in the industry to assist in finding potential portfolio acquisitions. As portfolios were identified, GAI performed an initial analysis to determine if the acquisition had any potential. If so, Operation Research would then determine the quality of the portfolio. Once the quality was determined and if the acquisition was deemed acceptable, a price subject to due diligence could be negotiated. If accepted, GAI would lead a team of CFC employees on the due diligence. Assuming a satisfactory due diligence, GAI would lead the negotiations on the agreement. Once satisfactory to both parties, the acquisition would be completed. Once the assets were obtained, each asset would be verified and GAI would lead the conversion team to move the assets to CFC’s system.
Over $300 million in assets were purchased generating an incremental $45 million in revenue the first year.