The Business: Do you fantasize about finding a way to turn deadbeats into dollar signs? Try this four-year-old credit-reporting agency. Its revenues have increased by more than 200% since 1996, which surely proves that information is money in this industry, especially for a company whose clients, mainly credit unions, banks, and mortgage brokers in two Rocky Mountain states, are desperate to avoid defaults and delinquents. The current owner is ready to close down this account and switch his energy to his other business, but his 18 employees (including a three-person sales staff with noncompete agreements) should be willing to keep charging ahead.

Price: $1.2 million

Outlook: When consumer expenditures and home purchases rise as quickly as they have in this economy, can credit problems fail to follow? No wonder this industry is hot, in terms of both growth and consolidation prospects. This company looks hot as well. A new owner could boost growth by marketing the company's value-added credit reports to more out-of-state clients (there's a small base already in a few states, but you'd need to increase the sales force) or by continuing the company's recent push into diversified products, which include tenant- and employment-screening reports. This past summer the agency even launched a drive to sell reports, for up to $75, directly to consumers, packaging them with personalized advice to help people improve their credit ratings. One caveat: you'll need to support new growth with fairly intensive technology expenditures since, among other things, licensing fees for the agency's industry-specific software are tied to the number of credit checks it performs. Don't be surprised if your tech costs rise from their current 5% of expenses.

Price Rationale: Service companies are currently selling for four to five times recast earnings, which for this company would suggest a ballpark figure of $924,000 to $1.2 million. That's if the market behaves rationally. But combine this agency's strong financials (great growth history and potential, no debt, and a well-diversified customer base) with the sizzle of its industry, and the bidding could get as overheated as a spendthrift's credit report. A similar business recently sold for five times recast earnings plus the value of accounts receivable (which added several hundred thousand dollars to the deal). These days, anything goes!

Pros: As long as people have trouble paying their bills, this company will never have trouble finding customers. That could make it a blue-chip buy.

Cons: If you pay too much for this agency and don't keep it on its fast-growth track, you'll be reading the bad news on your own credit report one day. --Jill Andresky Fraser

Gross Revenues Recast Earnings*
1996 $495,000 $144,000
1997 $1,084,000 $210,000
1998 $1,518,000 $231,000
*Before interest, taxes, depreciation, and owner's compensation.

Inc. has no stake in the sale of the business featured. The magazine cannot confirm the accuracy of financial or other information offered by the seller. Inquiries should be directed to Mike Sharp, Zirkle & Co., 801-566-2800, extension 106.