Great Lakes Collection Bureau Inc., a Buffalo-based debt-collection firm, has been purchased by General Electric's Auto Financial Services for an undisclosed price believed to be more than $40 million.
Great Lakes will operate as an independent entity under the massive GE Capital umbrella, with all 1,000 employees, including management, remaining in place.
"I can confirm that we have signed an agreement with Great Lakes and that it is business as usual," said John Glenn, a spokesperson for the Stamford, Conn.-based GE Capital.
Rumors of the purchase have been circulating in the business community for weeks, but the deal only recently came together, according to Great Lakes president Joel Castle.
"We've been talking about six months, with GE approaching us," said Castle, whose father, Joseph Castle, and current company secretary-treasurer Joseph P. Mosey founded the firm 23 years ago. Joel Castle and Mosey are co-owners.
No purchase price was revealed. Castle did say his combined companies recorded more than $60 million in revenues in 1996.
Sources, however, say the acquisition cost GE more than $40 million.
Castle emphasized that GE Capital Auto Financial is purchasing the entire Great Lakes operation, including:
The company's 52,000-square-foot main facility at 45 Oak St. and the attendant 200-car parking lot. Great Lakes bought what was known as the Barrister building in 1992 for $2.5 million from then-owner Comptek Research Inc. Roughly 900 employees are based at Oak Street.
North American Capital Corp., a firm also located at 45 Oak St. that purchases accounts receivables from companies, with its telephone collectors then working to retrieve money owed to Great Lakes.
First Delaware Creditors Alliance, Great Lakes' Canadian subsidiary headquartered in Fort Erie, Ont.
In addition to its main facility at 45 Oak and the Fort Erie operation, Great Lakes also maintains a satellite office at 2500 Walden Ave., where roughly 150 employees do precharge-off collections work.
Even the Great Lakes name is part of the deal, with Castle saying there are no plans right now to retire the sobriquet.
Castle said GE was not the only firm to approach him about possibly selling his company.
"This (debt-collection via call centers) is a very hot industry right now; we had other feelers," Castle said. "But we liked GE's philosophy, which is like ours: growth and volume."
Great Lakes itself has doubled its size within the last five years alone and, prior to the acquisition announcement, said it would add more than 300 workers by the end of 1997.
Likewise, GE Capital already has a major presence in Buffalo, with about 250 employees occupying 40,000 square feet in the Amherst area.
The company earlier this year said it was looking for 100,000 square feet of permanent office space, but then dropped its search to just 20,000 square feet to add to its then 20,000-square-foot facility at 15 Earhart Drive.
The reason? It was believed GE might move additional business to Western New York with its space needs increasing. With the Great Lakes deal, it is uncertain how much additional space GE will need.
GE Capital certainly has the economic firepower to add to its already growing call center business. The firm has assets of more than $185 billion, and is part of the mega-giant General Electric Co.
The call-center industry, which includes firms performing collections, telemarketing and customer service duties, is very much a growth industry on the Niagara Frontier. Such players as Softbank Services Group, International Data Response Corp., Ingram Micro, ICT Group and TeleTech all have been in the market for new people.
John P. Larson, an industry analyst with Superscript2 Securities in Milwaukee, estimates there are about 900 companies in the industry.