Chuck Stewart Explains Rationale for Made2Manage Acquisition of Encompix ETO ERP

On Monday, March 13, 2006, Indianapolis-based Made2ManageSystems, Inc. completed its acquisition of Encompix, Inc. The acquisition wasMade2Manage SystemsÂ' fifth during the past 20 months. When one software companyacquires or merges with another, there are primarily three assets involved, theproduct(s), the customer base, and the employees. In the past many of theseacquisitions involved product consolidation, massive layoffs, and customers leftwith an obsolete product with little hope of any major investment. So why is theacquisition of Encompix by Made2Manage different? Chuck Stewart, one of originalco-founders, answered in a recent interview.

 There were several factors that contributed to our decision to sell Encompix. Goingback a couple of years, Dave Warford and I realized that, at some point, Dave wasgoing to leave the business due to his age, either to retire or pursue otheropportunities. Initially, I planned to purchase DaveÂ's shares outright. But we soonrealized that the company would have to take on major new debt to buy out one of theprinciple shareholders. That new debt structure would have resulted in an unhealthyfinancial environment for the company. At that point, we decided to look at themarket opportunity for a merger or acquisition with a larger company. We werethrilled that 12 companies expressed an interest in Encompix. We picked threecompanies with which we had significant discussions, and eventually we choseMade2Manage Systems. Avoiding an unhealthy debt structure was the first businessreason behind the decision. The second reason was from a new systems salesperspective. We always thought that Encompix should be part of a larger softwarecompany, mainly because of the types of clients we attract. It seemed that everyyear we got involved with one or two large sales opportunities. We did very well atthe plant level and often ended up vendor of choice after the evaluation. Thestumbling block was when our proposal went up the corporate ladder and reached a CIOor CFO. They would look at the size of Encompix and find it difficult to justify theinvestment based on the potential risk. WeÂ've always believed that being part ofa larger company would give us the financial strength to overcome these objectionsand win larger value sales. From a business perspective, the revenue from one ortwo larger sales each year makes a considerable difference in how we were able torun the company, especially our ability to reinvest in the product, offer newtechnology, and add people. We wanted to be part of a very stable financialenvironment for our customers as well. Our customers are very important to us, andwe wanted to ensure that we could support them, as well as move forward withinvestments in new technology that will enable them to use Encompix for life.Â

Encompix (www.encompix.com) a business unit of Made2Manage Systems, has filled themanufacturing software requirements of engineer-to-order companies since 1992. Thecompany name reflects a commitment to developing business application solutions thatencompass the complex areas of project-based and job-based manufacturing. Encompixprovides ETO manufacturers with a competitive advantage by improving bottom lineresults.

Source: Express-Press-Release.com

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