Cracking the Continent: How to Succeed in European Debt Purchase
- VOLUME XVII, ISSUE 8
- Executive Insights
Debt Purchasers (DPs) searching for continued growth have increasingly limited options. Growth in new portfolios is slowing and is likely to turn negative over the next three to five years as vendors sell the last of the backlog built up during the financial crisis.
As their core business matures, ambitious DPs have two options. The first is to develop new businesses such as credit checking, lending, government or utility debt, or making secondary purchases. However, these lines of business are unlikely to generate the high rates of growth DPs have been used to previously. The second and more promising option is to expand into continental Europe.
Yet while some European operators have already proven it is possible to build successful cross-border DP businesses, U.K. and other international players considering following in their footsteps need to be aware of the risks of entering such a large and complex market.
In this Executive Insights, L.E.K. Consulting's Eilert Hinrichs and Peter Ward identify the mistakes so often made by new entrants to the European DP markets, before setting out the lessons and explaining the winning strategies of DPs who have successfully expanded in Europe.
For U.K. or other international DPs looking for continued growth, the rewards of success in continental Europe can be high – provided they target the right markets and adapt their operations accordingly. Those firms who gather detailed intelligence of the potential markets and have the deepest understanding of the opportunities will be best positioned to take full advantage.