60/40 Recapitalization
When we met Bud Reitzel and Brad Bradley, they had established an entrepreneurial consumer debt purchasing and collections business that purchased charged-off receivables for about two cents on the dollar and sought to collect three to four times this purchase price over the ensuing years. Asset Acceptance Capital Corp. (“AACC”) was growing at a rapid rate, and Bud and Brad were seeking a strong partner to help them manage the growth of their business and take it to the “next level” while also seeking to diversify their personal assets.

In September 2002, we completed a recapitalization transaction with AACC that provided the management team partial liquidity while retaining a 40% ownership stake and laid the strategic and financial foundation to support the Company’s future growth.

Taking AACC to the Next Level
We agreed with Bud and Brad’s assessment of the significant opportunities available in the consumer debt purchasing market and worked closely with management to implement a strategy of controlled growth to capitalize on these opportunities. Key elements of this strategy included disciplined purchasing, selective geographic expansion, asset diversification, and continued investment in management depth and technology. In addition, we collectively identified opportunities to reduce employee turnover, increase productivity and drive margin improvement.

In the fifteen months following the recapitalization, AACC steadily increased its purchasing activity, acquired and integrated three new collection facilities in Phoenix, San Antonio and Chicago, and diversified its asset mix while growing cash collections to $198 million from $107 million. In addition, through effective cost management, significant reductions in employee turnover and enhanced productivity, AACC was able to reduce its operating expenses as a percent of cash collections by over 200 basis points.

Successful IPO and Secondary Offering
As a result of AACC's strong financial performance and growth potential, in February 2004 we were able to take AACC public with a $120.8 million initial public offering, raising significant proceeds for expansion while also providing $55 million of liquidity to our investors and management partners. In April 2005, we completed a $108.6 million secondary offering, broadening the institutional holding in the stock and generating additional liquidity for our investors and management partners.