04.09.2009 / Michael Flock
Flock Advises Employee Buyout of Plaza Associates

Flock Advisors, an M&A advisory firm specializing in the collections and business process outsourcing industries, is pleased to announce its successful leadership of the acquisition of Plaza Associates by senior management and employees.

Flock led the capital raise and structuring for the purchase of 100% of the equity of Plaza Associates from the original founders. The creation of a fully leveraged Employee Stock Ownership Plan (ESOP) enabled the management team to lead the buyout financed in part through a senior credit facility from RBS Citizens, N.A.. This transaction is believed to be the first fully leveraged ESOP in the collections industry.

Plaza Associates is a 48- year old collection agency servicing major blue chip companies. Ranked by The Nilson Report as one of the top ten consumer collection agencies in the U.S., Plaza generated approximately $135 million in collections in 2008.

Paul Brennan, President and CEO, commented: "This transaction is a win for our clients, employees, and the three original founders. We are thrilled to have the opportunity to give our employees a stake in the Company at this critical juncture of our growth."

He added: "Michael Flock and Don Hilbert did an incredible job of raising the capital and structuring the transaction in a turbulent credit market. Their operational and financial experience in the collections industry made them particularly effective in selling the Plaza story to the many banks in their wide network in the capital markets."

This particular ESOP structure gave the sellers the opportunity to permanently defer taxes on their capital gains while also allowing Plaza to benefit from favorable tax treatment on the capital raised to finance the transaction. The ESOP will also provide the employees with a tremendous retirement benefit that doesn't require employees to make any contributions at a time when the economy has forced other companies to significantly decrease employer contributions to 401k plans.

Flock Advisors partnered with an authority on ESOP formation, Todd Butler, ESOP leader at Holland & Knight, a national law firm. Todd provided deep expertise in the negotiation and formation of the ESOP at Plaza.