Opportunity: Due south
For many businesses, last year’s ongoing economic uncertainty and fluctuating Canadian dollar signaled a time of consolidation. For SydneyPlus, the Richmond-based global provider of knowledge management software, it signaled a time of expansion.
In late 2011, with $4 million in funding from First West Capital, SydneyPLUS completed the purchase of Massachusetts-based Inmagic’s special library automation business—a purchase SydneyPLUS president Ron Aspe says will give the company great growth opportunities.
“We have long been seen as the supplier of the Rolls Royce of knowledge management systems,” says Aspe. “However we also had a Rolls Royce price tag, which could be limiting. With the addition of Inmagic's products we can reach new clients by providing entry level and mid-range library automation products.”
The right time for cross-border shopping
Aspe had been looking to expand SydneyPLUS for some time. As a cross-border buyer, there were a number of factors working in his favour.
“The availability of credit, continuing low interest rates and motivated U.S. sellers were all positive factors in doing this deal,” says First West Capital vice-president Kristi Miller. “Ron has been in business for many years, he understands the business environment and has made a number of successful acquisitions in the past. He certainly recognized a good opportunity with Inmagic.”
Funding a purchase with subordinated debt
Aspe financed previous business expansions organically or through traditional loans, but due to the magnitude and nature of the Inmagic deal he required a new funding source. Frustrated with the lack of interest from the big banks, and the inability of other funding providers to act quickly, Aspe’s interest in First West Capital piqued after receiving a timely e-newsletter from the team. He soon shifted his focus to First West Capital as a result of its proactive responses to his initial contact and their willingness to finance his acquisition within an aggressive time frame.
It didn’t take long for First West Capital to realize Aspe was an intelligent and seasoned operator with a clear sense of where he wanted to take his business.
“The InMagic acquisition is a great strategic fit for SydneyPLUS,” says First West Capital vice-president Robert Napoli. “Ron is an experienced operator and knew exactly how the combined businesses would deliver higher value to customers and his company. His solid business plan, coupled with SydneyPLUS’ strong client base and recurring revenue really helped us to put together the financing to meet Ron’s growth plans.”
The First West Capital experience
Aspe likens working with First West Capital to working with a very astute, business savvy board of directors, treating the deal more like an investment rather than a loan. He also sings the praises of how much time and energy Miller and Napoli put into the deal.
“Kristi and Rob are quick studies, they asked good questions and engaged in a dialogue with Inmagic’s CEO early in the process—all of which really helped make this acquisition possible,” says Aspe. “Once you get past the technical stuff, it’s quite straight forward. However, it’s getting to that stage, which Kristi and Robert did, that takes time. They really made a tremendous effort to quickly understand the business; that was a big factor in my having the confidence to partner with them."
The First West Capital advantage
First West Capital provides:
- Innovative and flexible subordinated debt solutions;
- A client-centred approach that results in exceptional service; and
- Responsive, firm and clear commitments that allow you to get on with what you do best—run your business.