Buyout Case Study: Academic Financial Solutions

Buyout Case Study: Academic Financial Solutions

Opportunity / Theme

Federal and private student loan lender

Fastest growing FFELP provider of student loan consolidations; founded in 2004 and by 2007 AFS was originating over $1 billion in student loans annually

Proprietary technology and marketing advancements allowed for systematic organic growth and market share penetration

The Transaction

In 2007, Frontenac Company led a recapitalization of AFS to acquire majority control

(56% Frontenac / 44% original owners)

12x return for investors on 56% sale

Board restructuring with the continuation of Michael Babb as CEO and introduction of John Decker (founder of Paymap, Inc.) as Chairman

Osceola Value-Add

Continued advancement of proprietary technology and marketing initiatives

Serving as CEO, Michael Babb created and implemented all strategic initiatives while developing a corporate culture that enabled dramatic but sustainable growth

Developed a platform that provided for efficient acquisition transitions into AFS’s culture and infrastructure

Exit Strategy / Current Status

To partner with all qualified Title IV institutions to become the lender of choice

Became the 7th largest lender in the country by 2008

Frontenac Company exited AFS in 2010 after legislation changes