Insurance Auto Auctions acquires Salvage Management

CNY Business Journal (1996+), Sep 22, 2006 by Palmateer, Paige

CICERO - Insurance Auto Auctions, Inc. (IAA), a national firm that sells salvaged cars for insurance firms, has acquired Syracuse-based Salvage Management.

"We acquired Salvage Management because It is an excellent business and it fit well with the company's other locations in New York," says Scott Pettit, CFO of IAA. "We've made a number of acquisitions this year to increase our presence in a number of key markets, and we feel that Syracuse will be a success."

IAA has 95 locations in 39 states. The 20-acre facility at 8459 Brewerton Road in the town of Cicero joins IAA sites in Rochester, Buffalo, and Long Island.

Pettit declined to disclose financial details of the Cicero acquisition, though he did say the company would continue to grow through new technology and geographic expansion.

IAA specializes in acquiring and selling total-loss vehicles.

"If your car is totaled, the insurance company writes you a check and then you rum the car's title over to the insurance carrier," Pettit explains. Various insurance carriers use IAA (NASDAQ: (IAAI) to auction the totaled vehicles, the majority of which are bought and dismantled for their parts.

The Cicero location features a large warehouse, private office space, Internet-bidding capabilities, and a weekly auction site. The site hosts a live auction every Thursday with an onsite preview every Wednesday from noon to 4 p.m. The branch manager is Michael Couger.

IAA's dual-bidding feature allows registered buyers worldwide to access a live auction on the Internet and compete with buyers at the location.

Founded in 1982, IAA became a publicly traded company in 1991. The automotive salvage company caters primarily to insurance companies and licensed dealers, dismantlers, and recyclers. IAA does not sell to the public.

IAA recorded second-quarter 2006 revenue of $78.3 million, compared to second-quarter 2005 revenue of $71.9 million, an increase of 9 percent. In 2005, the company generated annual revenue of $281 million.

On May 25, 2005, an affiliate of Kelso & Company - a New York-based private investment firm - acquired IAA for $400 million. IAA is no longer publicly traded.

IAA acquired 14 new locations in 2006, in addition to the Cicero site, Erie, Pa.; Indianapolis and South Bend, Ind.; Missoula, Mont.; Cincinnati, Columbus, Cleveland, Lima, Dayton, Ohio; Ashland, Ky., and Buckhannon, W.Va.; Des Moines, Cedar Falls, and Sioux City, Iowa, says Daniel Oscarsom, vice president of marketing.

According to an IAA release, the Salvage Management acquisition was ideal due to the experience of the existing staff.

"We retained the six full-time employees of Salvage Management, minus owner Nancy Meltzer," Oscarsom says.