Cunningham works with GTCR, and says the executives there are very encouraging. They want me to go out there and find deals that add value. Private equity firms should not be confused with venture capital firms, Cunningham believes, because in his experience private equity firms typically hold their investments for a long time. While venture capitalists look to exit the investment in two or three years, equity companies will hold for as long as 10 years. His position with RMA is to keep it privately held as long as it makes fiscal sense.
Internal growth is an important indicator to potential investors.
It's cheap growth, says Cunningham. It costs much less to hire and support a top salesperson and pay even a hefty commission or bonus than to just eat up another company and bulk up that way. Internal growth also indicates two key things about an executive team, he adds. Nearly all collections operations can be ramped up to national scale, except when debtors must be sued, a process that requires the help of a local lawyer. Creating huge collections centers with national reach means that managers have plenty of flexibility to organize internal specialties in different ways to suit the needs of particular clients while still maintaining enough staff power in each specialty to handle large accounts.