On Monday, March 13, 2006, Indianapolis-based Made2Manage Systems, Inc. completed its acquisition of Encompix, Inc. The acquisition was Made2Manage Systems’ fifth during the past 20 months. When one software company acquires or merges with another, there are primarily three assets involved, the product(s), the customer base, and the employees. In the past many of these acquisitions involved product consolidation, massive layoffs, and customers left with an obsolete product with little hope of any major investment. So why is the acquisition of Encompix by Made2Manage different? Chuck Stewart, one of original co-founders, answered in a recent interview.
“There were several factors that contributed to our decision to sell Encompix. Going back a couple of years, Dave Warford and I realized that, at some point, Dave was going to leave the business due to his age, either to retire or pursue other opportunities. Initially, I planned to purchase Dave’s shares outright. But we soon realized that the company would have to take on major new debt to buy out one of the principle shareholders. That new debt structure would have resulted in an unhealthy financial environment for the company. At that point, we decided to look at the market opportunity for a merger or acquisition with a larger company. We were thrilled that 12 companies expressed an interest in Encompix. We picked three companies with which we had significant discussions, and eventually we chose Made2Manage Systems. Avoiding an unhealthy debt structure was the first business reason behind the decision. The second reason was from a new systems sales perspective. We always thought that Encompix should be part of a larger software company, mainly because of the types of clients we attract. It seemed that every year we got involved with one or two large sales opportunities. We did very well at the plant level and often ended up vendor of choice after the evaluation. The stumbling block was when our proposal went up the corporate ladder and reached a CIO or CFO. They would look at the size of Encompix and find it difficult to justify the investment based on the potential risk. We’ve always believed that being part of a larger company would give us the financial strength to overcome these objections and win larger value sales. From a business perspective, the revenue from one or two larger sales each year makes a considerable difference in how we were able to run the company, especially our ability to reinvest in the product, offer new technology, and add people. We wanted to be part of a very stable financial environment for our customers as well. Our customers are very important to us, and we wanted to ensure that we could support them, as well as move forward with investments in new technology that will enable them to use Encompix for life.”
Encompix (www.encompix.com) a business unit of Made2Manage Systems, has filled the manufacturing software requirements of engineer-to-order companies since 1992. The company name reflects a commitment to developing business application solutions that encompass the complex areas of project-based and job-based manufacturing. Encompix provides ETO manufacturers with a competitive advantage by improving bottom line results.
Melissa Stahley
Made2Manage Systems
(317) 249-1270
mstahley@made2manage.com
www.made2manage.com
Roger Meloy
Encompix Inc.
(513) 733-0066, ext. 13
rmeloy@encompix.com
www.encompix.com
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