Accord Financial successfully sold the portfolio assets of Accord Equipment Finance (“AEF”), the Company’s US equipment leasing division. The acquirer is one of the largest privately held factor and finance companies in the United States, now expanding into equipment leasing. Along with the portfolio of leases, AEF’s team of professionals are joining the acquirer, which will ensure a seamless transition for the Company’s valued clients.
Gross proceeds of the transaction are $63.2 million (US$46.8 million), which is expected to have a positive impact on Accord’s tangible equity. Net proceeds will be used to pay down the Company’s primary banking facility. Accord will have the opportunity to earn an additional US$400,000 based on portfolio credit performance through December 31, 2025. The transaction closed on September 30th; the accounting calculations related to the transaction are being finalized, including the elimination of AEF-related intangible assets ($3.0 million reported at June 30, 2024), and will be reported in the Company’s Third Quarter Report.
The announcement follows on the Company’s previously announced review of strategic initiatives, including efforts to refocus on the core business and create shareholder value. “This transaction clearly demonstrates the value of Accord’s assets in the private market, both the value of the portfolio as well as the operating platform,” stated Simon Hitzig, Accord’s President & CEO.
The transaction is an important step in Accord’s strategy to refocus on its core business. Since its founding in 1978 the Company has steadily built its North American market position in receivables finance, including asset-based lending and factoring. Accord is also committed to expanding its presence in the Canadian small business finance sector, which has shown strong growth in the last five years. This transaction aligns the Company’s capital with these divisions, which are positioned to compete and grow.
The Hovde Group, a US-based investment banking firm specializing in the financial services sector, served as exclusive advisor to Accord.
Looking ahead, Mr. Hitzig added, “With this significant transaction completed, we’re setting our sights on several balance sheet initiatives to support renewed growth in 2025.”