Acquiring Assets - AvNetwork.com

Acquiring Assets

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In a business as regional as systems integration, there are many "friendly competitors" who partner on large projects and share other resources when the going gets tough. It can often be a benefit to establish these types of ties with a neighboring company, even if it seems counterintuitive to business sense.

In the past year, as memories of failed national rollups began to fade, several regional partnerships and expansions began to occur. The results of these devisions prove that with increasing project scopes and nomadic construction trends, growing a business by tapping into an established entity makes sense.

The most recent significant venture of this type is the joint venture agreement signed by Electrosonic and Scharff Weisberg Systems Integration. As of January 3, these combined forces became Electrosonic New York.
Operating out of a new space within Scharff Weisberg's complex in Long Island City, NY, the new business combines Scharff Weisberg's existing systems installation business with the Northeast division of Electrosonic. All staff will remain the same, and Scharff Weisberg's Lighting, Rental and Media Resources divisions are unaffected.

The partnership was accomplished for reasons of scale. "The thing that was very attractive to me about this partnership is the increased reach we would have," explained Scharff Weisberg president Josh Weisberg, "in that Electrosonic's having offices in many parts of the world would support the kind of design work that we're doing much more effectively than we could out of our single base in New York. And for Electrosonic, it provides a much higher presence in the New York design market, which they had difficulty gaining otherwise."

Electrosonic has an office in Princeton, NJ, and subsequently has a certain amount of business in the New York area, but the company saw opportunity in shifting its center of gravity into Manhattan. "We've known the people at Scharff Weisberg for years and collaborated on various things, so rather than trying to build the whole thing ourselves it was a good marriage to come together with them," said Jim Bowie, general manager of Electrosonic's North American systems operation. "Between our two companies we recognized that there was actually a void in New York for more of an enterprise audiovisual company that was willing to take on some of the bigger projects. There were a lot of small local players, and jobs were getting pulled apart, and we felt that we had the financial backing to take on those larger projects."

Electrosonic's established service operation and other business practices will be carried over to Electrosonic New York, and the company will have access to increased personnel thanks to the nearly 100 staff people Electrosonic now has in the U.S. "One of the difficulties of large audiovisual projects is they don't happen every year and they don't happen in the same location every time," Bowie said, "so for a smaller the company it's harder to take that on. Just the sheer size of Electrosonic makes it easier for us to manage those significant projects without it disassembling our company or causing internal problems." Additionally, Electrosonic's video product manufacturing expertise will help to bolster the new company's capabilities.

Another recent merger of friendly competitors has gone smoothly, with combined technical and sales resources already proving beneficial. Last fall's merger of Univisions and Crimson Tech produced the Univisions Crimson Group, and the outlook is good, says Bob Romano, president of sales and marketing.

"It's been surprisingly fun," he commented," because our customers now are so much more mature. Not that Cornell, Syracuse University and Ithaca aren't great, but when you're dealing with Harvard, MIT and Fortune 50 companies, they understand and respect the submittal process. Customers in smaller cities don't always want to pay for design engineering, programming and project management."

As the gap analysis process continues for the newly combined company, many processes have been formalized. "We really didn't have a good human resources department before, but now we have more than 100 employees, so you can't do employee reviews on a napkin in a restaurant anymore," Romano said. "You have to get a little bit more formal, and to that we have changed. That's a benefit to the employees too, because they want to know that their boss has got an organized mechanism to judge their performance and give them proper rewards."

The first steps Univisions Crimson Group has taken toward business growth have been an exploration of existing business. "You need to go to your current customer bases and start talking to the IT staff that has taken over for the audiovisual deparment," Romano suggested. "They're the ones who get the budgets and they're the ones who are running the networks, so you need to talk to them about new innovations in products."

Taking a similar tack in business development, HB Communications added a home division a year ago. "Basically what we did is apply the technologies that we typically integrate into our corporate projects and take that into the home," said Dana Barron, CEO of HB Communications. "This is past the home theater scenario, this is control for all home technology."

Speaking from the standpoint of a company that grew by training and adding staff to handle a new market, Barron's advice is to cultivate expertise in order to keep business coming. "A lot of the things that have been going on in the marketplace has been consolidation for reasons of economic survival, and the problem that exists right now in this market is the fact that the price points erode, but you still need the same amount of resources to integrate," he observed. "You need to have a very broad reach of technology that you can provide to your customers so that you're always riding the curl, and you always have the revenue opportunities to support a growing business."

Electrosonic...
www.electrosonic.com
HB Communications...
www.hbcommunications.com
Scharff Weisberg... www.swinyc.com
Univisions Crimson Group... www.univisionscrimson.com

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