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Wednesday, 16 May 2012 22:37

Applied Imaging relies on custom model for acquisitions

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GRAND RAPIDS — The key to a successful acquisition is the careful attention and process a company brings to it.

That was the message Applied Imaging founder John Lowery told attendees at the May 16 meeting of the West Michigan Chapter of the Association for Corporate Growth.

In an industry that has seen a lot of consolidation in equipment, documentation and network solutions, Lowery has carved out a place in the West Michigan market and has recently expanded to the metro Detroit area.

With a goal of reaching $100 million in sales by 2018, Lowery continues to grow the independent office technology company by using a custom acquisitions model that has put the company in a position to reach $33 million in sales for 2012.

Lowery and company used the model in 2003 when Applied Imaging purchased West Michigan Business Products.

“We try to develop relationships with people when things are good and they’re performing well,” he said. “When things are bad, we’re the first ones they call.”

Lowery met with the owner of West Michigan Business Products over seven years, learned about the business and over that time, decided if the company a good fit. With the help of outside consultants, which Lowery credits for a lot of the company’s success in its growth, he was able find the right price.

Applied saw a 39 percent internal rate of return over three years from the acquisition, Lowery said.

“As we bought that company, people at our company were really energized by that and our ability to grow,” he said.

After finding success from that acquisition, then more with the purchase of American Imaging, Lowery thought about going after large companies in the $6 million to $10 million range. However, the advice of his consultant group reined in his ambition. The group suggested he stick to acquisitions in the more manageable $1 million to $3 million range.

It’s much easier to integrate employees and manage expectations when acquiring smaller companies, he said, which allows the Applied Imaging company culture to sink in more efficiently.

Lowery said another key to a successful integration, beyond making sure the company in question meshes well with Applied’s goals, is vetting the client base. When Applied wanted to move into the metropolitan Detroit market, it knew that if it wanted to expand, that’s where the company had to go.

Lowery predicts if Applied is able to capture just 10 percent of the market in the Detroit area, the company has the potential to grow its sales well past the $100 million mark to $180 million.

Applied currently has a 98.6 percent retention rate with clients, and Lowery directly equates that to the kind of personal service the company provides – something that is important to replicate on the east side of state if Applied is to grow the same way it has in West Michigan.

Lowery said Applied already has another potential acquisition target for this year. While there is no secret sauce for pulling off a successful deal, companies have to work at it, similar to how they need to do their homework in finding the right people, he said.

Read 1933 times Last modified on Thursday, 04 October 2012 00:30

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