Brian Bonar has been on a roll this year. The CEO of Imaging Technologies, which trades over the counter with the symbol “ITEC,” has been executing his plan to transform the digital imaging company into a services oriented one. Bonar realized that a manufacturing company could never have the kinds of margins that a service industry does. He decided on a plan that would see ITEC take over service companies that could then be integrated to sell products that ITEC manufactures. The idea is that the synergy that resulted from these takeovers could propel ITEC to the highest profit in years.
The most recent acquisition that ITEC completed was SourceOne Group. This professional employer organization serves small and medium-sized businesses in Virginia. Their customers are already used to buying PEO services, so it’s less of a challenge to move them into other sales of products or services. ITEC gets both the customer base and a team of experienced sales people when they acquire an existing company. These sales people are trusted by their customers so they can easily recommend a full suite of new services that will be well received. When Bonar compared this to the current much longer business to business sales process, he immediately realized that buying companies outright would speed up ITEC’s growth immensely.
Bonar has stated recently that he’s very happy with the progress that Imaging Technologies has made this year. The company continues to look for new companies that they may be able to make deals with. The strategy they’re working on will require finding more candidates who have the types of staff and customers they’re looking for. If they can continue to find these opportunities, there is no limit to the amount of growth that ITEC will experience. Integration is the easy part, because that’s one of the core competencies of the parent company.
Brian Bonar continue to execute on his plan, which is all any company can ask of a CEO. There’s no time for second-guessing the strategy, especially when it’s been paying off so well. ITEC is in a position to make its PEO business into an industry leader, under the leadership of Bonar. They have the staff and the infrastructure to service many more customers than they currently have. There is no chance they’ll need to slow down because of problems scaling up. ITEC will see increasingly larger profits as they convert more of their revenues to service orientation from product-based. Manufacturing carries many additional expenses over service. As time goes on, those expenses from manufacturing will become a smaller percentage of overall revenues. That means a much higher operating margin which will increase cash flow. That excess cash can be used to fund more acquisitions.