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Workflow Management Acquires Two More Firms

April 2000
CHICAGO—Palm Beach, FL-based Workflow Management plans to acquire Office Electronics (OEI), a $55 million graphic arts distributor and manufacturer here. The move adds new Workflow sales offices in nine cities: Chicago, Des Moines, Minneapolis, Kansas City, Cincinnati, Nashville, Dallas, Houston and Milwaukee.

Additionally, officials believe the acquisition will strengthen Workflow's existing sales offices in Los Angeles, Philadelphia, Atlanta, Washington, DC, and St. Louis, as well as enhance Workflow's efforts as a distributor of custom printed products and office consumables.

"We are purchasing a sales force with $55 million in existing revenue and a tremendous upside potential," says Tom D'Agostino Sr., Workflow's chairman and CEO. "OEI has an experienced sales force of more than 90."

However, OEI's manufacturing facilities aren't included. "When reviewing the strategic potential of this acquisition, we determined that by separating the sales force from the manufacturing operations we could significantly maximize distribution sales," D'Agostino notes.

"We plan to sell off the manufacturing operations. By divesting of the manufacturing units by product line, we have been able to attract potential buyers that would not have been able to consider a purchase of OEI as a whole."

Workflow Management intends to divest the OEI manufacturing operations in several separate transactions to occur following the closing of the acquisition.

Steve Gibson, executive vice president and CFO of Workflow, estimates that the OEI transaction will add at least $3 million of operating income during the next 12 months.

"After accounting for the proceeds from the sale of the manufacturing units, the net present value of the total consideration should be approximately $6 million," he says.

"While the transaction has many moving parts, we have been delighted with the high level of interest in the manufacturing operations and believe that the OEI acquisition will deliver positive results for Workflow and the OEI manufacturing and sales employees," Gibson adds.

In addition, Workflow has purchased ALF Graphics, a New York City-based commercial print distributor. Formerly owned by brothers Alan and Jay Finkelstein, ALF Graphics should add approximately $8 million in revenue. Workflow paid a total consideration of $4.5 million in an all-cash deal.

"As successful print brokers, both Alan and Jay are experienced at being single-source providers of business printing," D'Agostino comments. "We see them as a valuable addition to our Integrated Business Services team."

Alan Finkelstein adds "We saw a great deal of compatibility and potential in becoming part of Workflow Management. They have developed the most full-featured electronic system for facilitating the whole print procurement and management process."
 

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