DEBUG: PAGE=domain, TITLE=NelsonHall Blog,ID=1469,TEMPLATE=blog
toggle expanded view
  • NelsonHall Blog

    We publish lots of information and analyst insights on our blogs. Here you can find the aggregated posts across all NelsonHall program blogs and much more.

    explore
  • Events & Webinars

    Keep up to date regarding some of the many upcoming events that NelsonHall participates in and also runs.

    Take the opportunity to join/attend in order to meet and discover live what makes NelsonHall a leading analyst firm in the industry.

    explore

Subscribe to blogs & alerts:

manage email alerts using the form below, in order to be notified via email whenever we publish new content:

Search research content:

action=something else...array(7) { ["program"]=> int(-1) ["analyst"]=> int(-1) ["industry"]=> int(-1) ["serviceline"]=> int(-1) ["vendor"]=> int(-1) ["country"]=> int(-1) ["application"]=> int(-1) } array(0) { }
from:
until:

Access our analyst expertise:

Only NelsonHall clients who are logged in have access to our analysts and advisors for their expert advice and opinion.

To find out more about how NelsonHall's analysts and sourcing advisors can assist you with your strategy and engagements, please contact our sales department here.

Alorica Acquires EGS to Become Global Top 3 CMS Vendor: Healthcare Business Key to Growth

Andy Lee, Alorica founder and CEO, shared with me last summer that his goal was to become the number one CMS vendor (by revenue) serving N. America. Well, now he is closing in on that goal, with Alorica entering into a stock purchase agreement to acquire Expert Global Solutions (EGS). With EGS, we estimate Alorica’s pro forma 2015 North American revenues are ~$1.8bn, closing the revenue gap on current number one North American CMS vendor Convergys by over a half, from ~$1.4bn to $675m.

EGS is a portfolio company managed by One Equity Partners (OEP), a middle-market private equity firm. Post EGS acquisition, Alorica will employ over 91k people in 154 locations across 16 countries in five continents. Lee will be CEO and Chairman of the new organization, based in Irvine, California. He will also be the majority shareholder. The companies expect to complete the transaction by early Q3 2016. The purchase price is not being shared at this time but Alorica plans to release this information over the next few months.

Lee founded Alorica 16 years ago with $10k and a vision. Fast forward to 2015, and Alorica had beome a $1.2bn company with the West Corp. Agent Services acquisition. And with EGS, Alorica will be generating ~$2.3bn in global revenue, behind only Teleperformance and Convergys as a pure play CMS BPO provider. In CMS BPO, scale is critical; clients want fewer partners, for one. By acquiring EGS, Alorica also avoids becoming a consolidation target.

Beyond the increased scale:

  • EGS will expand Alorica’s healthcare sector business, reducing its dependence on the communications sector (currently its largest sector, accounting for ~28% of global revenues), healthcare, media/entertainment, financial services, and retail. It is also looking to grow its business in the technology, energy/utilities, travel and hospitality sectors. Alorica supports payers, providers, PBMs, pharmacies, and (to a small extent) medical device companies, providing primarily customer care and technical support services. EGS brings a number of healthcare industry accounts and pharmacy business. Alorica’s healthcare business currently represents ~9% of its total company revenue; it anticipates that this will increase to ~14% post-acquisition
  • Alorica will benefit from the EGS collections business which will be branded under Alorica Financial Care. The focus will be first-party collections in the 30 to 90 day time period
  • EGS also brings in some customer analytics capabilities offerings.

Just over a year ago, Alorica doubled in size with the acquisition of West Corporation’s Agent Services. The integration has been smooth, and Alorica claims that it has not lost any of the clients it obtained from West. One of the lessons learned from that acquisition was the importance of not over burdening its operations, HR, technology, and communications teams with integration work. With the EGS acquisition, it will have personnel dedicated to the integration, supported by McKinsey consultants.

Alorica and EGS have a limited delivery overlap. The network IP will be Alorica branded. It took one year to integrate West Corporation’s Agent Services business and the same amount of time is anticipated for the EGS integration.

Client overlap is 10-12 clients, from the communications, retail, and technology sectors. Post-acquisition, Alorica will serve ~600 clients, supporting ~30 languages. It will employ 52k people in North America (including 6k work at home agents), 26.3k in the Philippines, and 11.8k in Latin America.

EGS is Alorica’s second key acquisition in two years. In integrating West, it has learned to manage business integration smoothly, handle significant growth, and retain clients. Far from being a consolidation target, Alorica is becoming a consolidator.

One year on from my chat with Andy Lee, it’s good to see a leader articulate a clear goal and successfully lead a team on the road to making it a reality.

Postcript: This deal was completed on June 30, 2016.

No comments yet.

Post a comment to this article:

close