NCO Group CEO Makes Offer to Buy Company for around $1 billion

NCO Group (Nasdaq: NCOG) today announced that its Board of Directors has received an offer from NCO Chairman and CEO Mike Barrist, in a letter sent Monday, to purchase all outstanding shares of the firm for $27.50 each in cash. The Board said that they plan on meeting today and will form a special committee to evaluate the offer.

Barrist has partnered with One Equity Partners II on the deal. According to the letter from Barrist, One Equity manages over $5 billion in capital and has ?extensive experience with management-led leveraged buyouts.? Barrist also stated that he and his group have received financing from Morgan Stanley to complete the deal.

According to NCO?s first quarter earnings release, the firm had 36,259,000 diluted shares outstanding as of March 31. Based on those numbers, the total offered for all shares in the letter is a little more than $997 million.

NCO?s stock jumped more than 40% in early trading on Tuesday.

The text of the letter sent to the NCO Group Board of Directors is below:

CONFIDENTIAL – Sent Via Federal Express

Board of Directors NCO Group, Inc. 507 Prudential Road Horsham, Pennsylvania 19044

Gentlemen:

I propose to acquire by merger all of the outstanding common stock of the Company for $27.50 per share, on the terms and conditions more fully set forth below (the “Proposed Transaction”). This price represents a 42% premium above today’s closing price of $19.36 and a 33.8% premium above the 90-day average price of $20.56 per share.

I intend to partner in this transaction with One Equity Partners II, L.P. One Equity Partners II and its affiliated funds manage over $5 billion in capital, have acquired over 20 portfolio companies for aggregate consideration of over $7 billion, and have extensive experience with management-led leveraged buyouts. Given the extensive work that has already been completed by One Equity and Morgan Stanley, the fact that we have committed financing and our collective knowledge of the Company and its industry, I believe we can quickly and with great certainty complete an acquisition of the Company at what I think is a very attractive price.

The Proposed Transaction would be financed through a combination of approximately $388 million of equity and approximately $815 million of debt. Morgan Stanley has provided to One Equity Partners II a commitment for the full amount of the debt financing (including, if necessary, a bridge facility) required to fund the Proposed Transaction which One Equity Partners II is prepared to accept if we move forward with the Proposed Transaction. A copy of Morgan Stanley’s commitment is enclosed.

I would make a significant investment in the transaction and would expect to provide other members of the Company’s senior management team with the opportunity to participate as well. I would continue as chairman and CEO of the Company following the transaction, and I expect that our senior management team would also continue with the Company.

I know you are aware of my strong belief that the Company would be best served by a prompt resolution of this process. Accordingly, if we promptly enter into the Proposed Transaction, our proposed merger agreement would expressly permit the Company to solicit superior alternative transactions for a period of 21 days after execution of the merger agreement (the “Go Shop Period”) and, at any time prior to shareholder approval of the transaction, to terminate our merger agreement to accept a superior proposal, subject to customary “matching rights.” Further, if the Company terminates our merger agreement to accept a superior proposal that was received during the Go Shop Period, the Company would be required to pay a break up fee equal to only 1% of the transaction value, plus reimbursement of actual expenses. If the Company terminates our merger agreement to accept a superior proposal received after the Go Shop Period, the Company would be required to pay a break fee of 3% of the transaction value. Under this arrangement, the Company will be able to guarantee a high premium value for the Company without foreclosing the possibility, which I believe is unlikely, of obtaining an even greater value from a third party.

This proposal is subject to satisfactory completion of confirmatory due diligence by One Equity Partners and Morgan Stanley and the negotiation and execution of acceptable definitive documentation. Based on discussions I have had with One Equity Partners and Morgan Stanley, I am confident that their diligence will confirm their assumptions. Further, given the extensive work they have performed to date, I believe that, with your cooperation, their diligence can be completed within 7 to 10 days, concurrently with the negotiation and finalization of definitive documentation.

I anticipate that you will promptly establish a special committee of independent directors to review this proposal and consider how the Company should proceed. To facilitate this process I enclose a copy of our proposed merger agreement.

Of course, no binding obligation shall arise with respect to the proposal or any transaction unless and until definitive documentation has been appropriately approved, executed and delivered by the parties.

I believe that this proposal is in the best interest of the Company, its shareholders and its employees and I look forward to discussing this proposal with you in the near future.

Very truly yours,

/s/ Michael J. Barrist

Michael J. Barrist