The attendance at the conference grew by 15% over last year to 249 attendees.
Originally, this mid-year conference was mostly an organizational meeting for the Board, the committees and the committee
members, but has grown far beyond that to really become almost as much as the Spring conference. Sure there is time for the business part of NAPBS, but there were also two days of education tracks that
were all very well attended. Some of the topics:
·
NAPBS benchmark study
·
Foreign education and employment
·
CRAs and providers
·
International criminal reports
·
Employment contracts
·
E-Verify
·
Integration with vendors
·
Best practices Certification Checklist
·
FCRA state law
·
Mergers and Acquisitions (which I was pleased to present)
·
Sales accountability and metrics
·
ISO 9000 roadmap
·
Responding to RFPs
·
Price competition
· And a big closing by a professional duo from outside the industry. They really didn’t pull off this
group participation exercise as well as one might have hoped, but there is always something to gain from these “experts.” I came away with two lessons:
“If you always think
like you always thought
you will always get
what you always got.”
and, when you have interpersonal (as in people) issues that need to be
discussed, it is important to stress to all parties that the goal is to “let ideas compete, not people.”
And, of course, networking, networking, networking; with other companies and with the 25 or so exhibitors
who help support NAPBS and care enough to be there for NAPBS members. There
was also some very effective after-hours social networking which is so much fun and so informative as well. Funny, almost
everyone I spoke to said they were winners at the casino (how can they stay in business).
Kudos again to
the conference committee, headed by Mike Pachata and Don Owens and all the volunteer ambassadors who helped in the education
sessions (Cathy Baker and John Carranco from BIS were my helpers in my presentation-great job, guys). And a special thanks to the function sponsors, also critical to the financial success of the conference
and NAPBS.
Accreditation
This major goal of nabps has been in the works for four years and the committee presented a spreadsheet
checklist of the things you will need to have in place to meet the requirements. No,
the requirements are not yet completed but are anticipated to be published before 2009.
The checklist for self-audit has been created and available for those that want to be there first to be certified. In the past couple of years we have seen where end users have been asking their prospective
background suppliers if they are NAPBS members. Soon, those that are certified
will be asking the buyer if those competing for their business have achieved the accreditation from the industry association. Being an early adopter should give you a competitive advantage and help prepare you
to avoid those continuing, increasingly pesky lawsuits; and when you get that threatening letter from a consumer’s lawyer,
you will have a superior defensible position. The committee estimated it could
easily take up to one year for a CRA to get ready for formal certification. The
checklist will be downloadable from the NAPBS website.
Industry Trends
The impact of the economy (and the crashing stock market) was on everyone’s
mind. When we asked about sales patterns, we got the following feedback:
· The smaller
the company the less they saw any change.
· Tenant
screening companies have actually seen a slight increase since people cannot buy a house or might have been evicted from their
home, so they have to rent.
· As the
size of the company increased we heard same-store sales were off as much as 30%. 30%!!!!! Ouch. However, every company said they
had booked enough new business to offset their same store sales decreases. Of
course, some of these could be exaggerating, but with the changes at ChoicePoint (now Lexis-Nexis ChoicePoint) and HireRight
(now owned by USIS) and FADV (with employee cutbacks and real gains in productivity), maybe the “big boys” are
leaking customers down to SMBs.
·
We heard from many that the increasingly competitive market is
driving down pricing and they were struggling to figure out how to cope with this to maintain their bottom line.
When we asked what they were doing to respond to the fall off in sales
and the price pressure, we heard “reduce staff,” “reduce the
price we pay for what we buy*,” “more technology,” “increase our sales efforts,” and “add
new products.” What are you doing?
M&A
The big question about M&A was whether the valuations of
background screening companies are holding up. If you had asked me a month ago
I could confirm that they are. But the current liquidity crises might just put
a dent in these multiples. And, of course, if your total revenues are down, your
selling value will be less. If the macroeconomics are such that we will be in
a recession for the next couple of years, meaning a much slower growth rate for you and the industry (or a negative growth
rate???), it is likely the historical multiples given by potential acquirers accustomed to strong historical growth, may be
less. This is not to say that CRAs in the right markets where the recession will
not impact sales and CRAs who are aggressively bringing on new clients will be impacted this way. If the industry is down and your sales are up, that is a great story.
And, there are still buyers out there; we still think you can get a good value for your company.
Court researchers. The concerns expressed by local court researchers is that the hit rates, according
to one court researcher, have risen from 6% ten years ago to 18-30% today. Why?
Because they are getting pre-screened names where there are website or database hits that need to be researched. Of course their labor cost will go proportionately and they may have to begin charging more to cover their
labor. Thankfully, gas prices are moderating and this is a relief for those that
travel from court to court.
People Stuff
It
was very sad when Caryl McMains of ClearStar and a key NAPBS conference organizer had to leave the conference early because
of the passing of her father. Caryl, my personal condolences and condolences
from all your friends at NAPBS.
I
also heard that David Millsap, formerly of Affiliated Information Resources has also passed, as has John Caswell of Omnia. In 1992, I helped John add background screening services to his offerings and 15 years
later he asked me to sell his background screening company, which we did in 2007.
Todd
Hensley (former USIS, former NBD) had landed at Sterling, creating a new wholesale division.
Barry Nadell, who had sold his company to Kroll-Background America, is now retired into Nadell Investigations
as an expert witness in legal issues for our industry.
Barry Neel acquired AccuSearch from Mark Shook.
Products
Nothing new here, but if you don’t know what “screen scraping”
is, start to learn.
The next conference
will be in April 2009 in St. Louis with a forecast attendance of 800.
*Commercial message:
Call Berg Consulting Group for service in this area.
Our
Better Vendor program will save you 35- 55% on criminal searches.
