Debt Resolve Inc., which offers an online platform for negotiating repayment plans, said Tuesday that it is buying a collections agency to round out the services it can offer creditors.
The White Plains, N.Y., software provider said it would pay $60 million in cash and $4 million in common stock for Creditors Interchange Receivables Management LLC, which specializes in collecting debt that has been delinquent for a short period.
In January, Debt Resolve bought First Performance Corp., which collects late-stage delinquent debt. Debt Resolve also buys distressed consumer receivables through a homegrown subsidiary, DRV Capital LLC.
James Burchetta, a co-chairman and the chief executive of Debt Resolve, said in an interview Tuesday that buying Creditors Interchange would let it cross-sell services for the "whole life cycle of a debt" and create "a laboratory where we can prove and test our Internet strategies."
His company's software helps lenders, collections agencies, debt buyers, and utilities arrange for people to make bids online to settle repayments.
Debt Resolve said its deal, expected to close by the end of next month, is in keeping with its plans to expand through acquisitions as well as organically and internationally.
Mr. Burchetta said the Internet, which helps companies save money and is more efficient than call centers and agents, is an ideal tool for collections. "There is more and more debt, and it costs more to collect." The Internet lets companies "communicate in a very efficient fashion."
Creditors Interchange generates about $60 million of annual revenue. The Buffalo company has eight offices in the United States and Canada and a call center in India.
Sameer Gokhale, an analyst with KBW Inc.'s Keefe, Bruyette and Woods Inc., said in an interview Tuesday that buying Creditors Interchange would expand Debt Resolve's area of operations much more than First Performance, which has offices in Fort Lauderdale, Fla., and Las Vegas and generated a tenth as much revenue last year. "This seems like a much bigger deal than any of the other businesses, and I think it adds a lot of scale."
Mr. Gokhale called Debt Resolve's vision of an online debt resolution market "a pretty novel concept" from a company trying to be "somewhat pioneers."
By midafternoon Tuesday, Debt Resolve's shares had fallen nearly 13%, to $4.10 a share. The company went public in November at $5 a share.
Mr. Burchetta said Creditors Interchange has "embraced technology in a real way. They fit in perfectly to our strategy of … [using the] Internet."
