Winner | Deal: >$150M
- Company: Netech Corp.
- Annual sales: $385 million in 2015
- Total employees: 85 in West Michigan; 435 people overall at 11 offices in the Midwest
- Business description: Information technology services provider
- Personal information: 65 years old. Wife, Nancy. Three sons and two daughters, and 15 grandchildren
- Advisers: Barnes & Thornburg LLP (legal); Lincoln Financial (investment bank)
Jim Engen started Netech Corp. 20 years ago with five employees.
By the time he sold the information technology services provider early this year to New York-based Presidio Holdings Inc., Netech employed 435 people at 11 offices in the Midwest and generated annual revenue of $385 million. The company grew 20 percent to 30 percent annually for years and never had a down year. In 2015 alone, Netech’s revenue grew by $60 million.
That kind of track record would surely enable any company to command a premium price.
Yet when the time came for the 65-year-old Engen to exit and sell the business, he prioritized finding a buyer who would maintain the corporate culture he crafted at the company over two decades and who would be good for his employees. Getting top dollar was secondary to ensuring that under new ownership, the company would continue to treat employees “extremely well.”
“We may have gotten more money from another potential buyer, but we felt Presidio was the best fit for our people. I was very concerned about our people,” said Engen, who shared a portion of the proceeds from the sale through employee bonuses that totaled several million dollars.
“Our employees are very dear to me,” he said.
The sale of Netech in February 2016 for a “shade over” $250 million won the 2016 MiBiz M&A Deals and Dealmakers of the Year Award for transactions of more than $150 million.
After deciding that it was time to sell — and upon a friend’s recommendation, Engen hired an investment bank to represent the company.
Working with the Chicago office of the global investment bank Lincoln International, Netech initially attracted 11 prospective buyers. The list was narrowed to six, and then to three, before Engen chose Presidio Holdings, a portfolio company of private equity firm Apollo Global Management LLC.
Presidio Holdings employs more than 2,400 I.T. professionals at more than 50 offices in the U.S.
Although substantially larger, Presidio Holdings shares a “very similar” corporate culture as well as offers a similar lineup of services and products as Netech, Engen said.
“It was a pretty easy sell,” he said. “They are a technology company very much like ours and they brought some stuff to the table. They had resources we could not have afforded.”
The deal, for instance, now allows Netech to offer clients high-level cybersecurity services and gave the company access to talent in cloud computing.
“We were always searching for resources. Talented engineers in the networking space are really hard to find,” Engen said. “(Presidio) had more resources than we could imagine, and we were going to be able tap into that.”
Engen owned Netech with his sons, Tim Engen and Ryan Engen, and son-in-law Mark Wierenga, who each held minority stakes in the company.
The three Engens left the company after the deal closed and are now involved in other business ventures. Wierenga, who previously served as the executive vice president of sales and operations at Netech, became president of Presidio’s north central area.
These days, Jim Engen has commercial real estate and other business interests to keep him busy. After the sale closed, he formed a family office and also has become more involved in philanthropy.
Engen describes the sale process as an “extremely emotional time,” not only for him but for Netech employees with whom he had grown close over the years — and who were anxious about what the new ownership would mean for the company.
“We had just built relationships and I wasn’t going to be there. It was extremely emotional, but we had to remove that and say, ‘Look, there’s going to be a new chapter,’” he said.
When the deal came down, Engen told employees that he had chosen Presidio based on its corporate culture and “they were very similar to us and they were not just an investment fund that wanted double their money and resell the company in five years.”
The new chapter under Presidio Holdings has resulted in “very little changes” in how the company operates. Engen recalled a recent conversation with an engineer at the company who told him that everything “is pretty much the same,” only without him as owner.
“I couldn’t have hoped for a better answer,” Engen said.