BSC Ventures continues to strengthen its track record in spotting good acquisitions, teaming them up with like companies, and improving each company in order to enhance the power of the teamed companies. “The important value that BSC brings to the table is the ability to build on mature companies that have a long history within their industry and help them accelerate at things they are good at,” says Brian Sass, CEO of the Atlanta-based holding company focused on manufacturing companies in the printing and paper converting industries.
“BSC is a company that has the experience and wherewithal to work with the operating divisions of our companies to really help them re-define their business processes so these companies can become top-notch suppliers in the markets we choose to serve,” explains Sass. “A company our size cannot be all things to all people, but we can do a great job very profitably for the customers we choose to serve.”
Sass and partner Stockton Croft founded BSC in 1999 when the two entrepreneurs decided to acquire Techno Aide, a profitable manufacturer of specialized accessory products used in the medical imaging industry. “It was a unique opportunity and we acquired the business with the idea of making other acquisitions that would complement the business and markets in which Techno Aide played,” Sass explains. “Since it was part of Atlantic Envelope Company, we also planned acquisitions in printing and paper converting because of our experience in these industries.” Techno Aide continued to grow throughout the four-year period BSC owned it, building a strong management team. “We did the right things to drive double-digit top line and bottom line growth, and when there wasn’t any more value we could add at the corporate level, we knew it was time to sell the company,” Sass says.
In 2001, BSC acquired three operating divisions of Dimac, a $500 million company that went into bankruptcy and was selling off its manufacturing assets. “We acquired three of its six manufacturing divisions,” says Sass. Double Envelope is a custom envelope manufacturer headquartered in Roanoke, Va.; Convertagraphics – also located in Roanoke – is a manufacturer of order forms for the catalog industry and Diversified Assembly is an Atlanta-based manufacturer of filing products. BSC sold Diversified Assembly around the same time it divested itself of Techno Aide. “The reason we sold it is because the market got highly competitive with manufacturers in Mexico and China,” Sass says. “Then, with the slowdown of the economy, it didn’t make sense for us to hold onto it.”
Double Envelope was founded in 1917 and today produces more than 2.2 billion envelopes annually. Convertagraphics, founded in 1971 as a division of Double Envelope, specializes in high-volume web-converted products such as bind-in order forms, airline ticket jackets, brochures, newspaper inserts and personalized direct mail products. “We continue to own businesses for as long as we are able to add value to them – and this is what we are really focused on with Double Envelope and Convertagraphics,” says Sass.
In addition to its 135,000-square-foot Roanoke facility, Double Envelope operates a 60,000-square-foot plant in Gainesville, Fla. and employs about 250 people in total. Although each facility does similar manufacturing, Gainesville does high-volume work using its high-speed equipment, while the Roanoke plant is equipped to handle more complex and shorter runs for a broader range of customer product requirements. The company’s primary customers are those sending out statements and transactional envelopes – such as financial institutions including banks, insurance companies, and credit card processors. It also serves direct mail customers, particularly in the Washington, D.C. and Philadelphia markets. “We have been able to carve out an ex-panded southeastern market, selling into Philadelphia, west to Indiana and into the southern states below,” Sass says. “Double Envelope is big enough to have the resources to handle significant customers and still small enough to be agile at moving business between plants and getting multiple sales representatives and multiple plants involved. We can accomplish what is often hard to do in terms of coordinating customers that require service from more than one plant.”
Convertagraphics employs 45 people and operates 40,000 square feet within the Roanoke Double Envelope facility. The company uses large web-litho heat-set printing presses to make bind-ins for catalogs. “These are the order forms commonly found within the catalogs and it’s a very important part of the marketing strategy in terms of advertising sale items as well as including regional customization,” Sass says. Convertagraphics sells nationally and is recognized within the catalog industry as a leader in providing high quality inserts.
Double Envelope takes customer feedback very seriously. “Our customers continue to challenge us to improve and we have been willing to re-define our business processes to better serve them,” says Sass. One example of this kind of responsiveness involves a customer in the healthcare industry that mails out over 200 million envelopes annually – explanation of benefits as well as reimbursement payments to doctors and hospitals. “They challenged us to improve the quality of our envelopes because one of the biggest quality problems a mail house operation can have is the way in which the envelope is glued together,” explains Sass. “Rationalizing quality problems by saying one bad enveloping in two and one-half million is OK just does not work when your envelopes contain checks. So we had to dramatically improve our quality performance with this customer which caused us to reengineer the way we apply glue in our manufacturing process.”
In the last 18 months, Double Envelope took that challenge to heart and to the drawing board. “We changed the way the glue is applied, using a computer-controlled extrusion system that checks every single envelope after the glue is applied,” explains Sass. A detection device inspects each envelope to assure the glue has been applied in the right places. Double Envelope also changed the formula of the glue to accommodate the process change.
Another example of process change currently underway resulting from customer responsiveness involves a very large bank. “They wanted to know if we could provide custom envelopes down to quantities of 500 so all the letterhead for branch managers would be personalized while adhering to the corporate specifications,” Sass says. The order entry and delivery process will be cut dramatically, eliminating the need to request the order (sales value of only $10 to $20) through a centralized purchasing representative who has to fax the order to Double Envelope’s customer service representative. This person then has to enter the order, get the printing plates made and make sure the custom overprint was right for the particular branch manager. “We are streamlining the process so the customer can choose the envelope from an e-catalog, e-mail the request to Double Envelope and the request automatically becomes an order entered into our system which then feeds a digital electronic press designed for short runs,” explains Sass. “So we will eliminate the need to make plates, change inks and all the rest of the operations necessary in a traditional litho press process.”
Utilizing Inherent Strengths
BSC is currently evaluating what Sass describes as the patchwork computer applications utilized in the two companies at the time of the acquisition. “Those systems semi-talk with each other and some work independent of others and as a result there are a number of duplicated processes,” explains Sass. “So we are streamlining our network. Because our businesses are really very job-shop oriented in terms of customizing for our customers and building a custom product to order, and because order-to-delivery times continue to decrease because of customer demand, our new information system will help us be more responsive to our customers.”
As BSC continually invests in the latest equipment for its facilities, it also has an eagle eye for possible acquisitions on the manufacturing landscape. “We continue to invest in new folding equipment and we are currently evaluating a 20,000-square-foot expansion of our Roanoke facility,” Sass says. This expansion would incorporate the company’s warehousing operation, currently done in a leased facility off-site.
Sass says there could be a possible acquisition on the horizon, which would take the company further into the direct mail market, adding new growth. For now, though, BSC is focused on its role as a manufacturing holding company. “We have a different approach than other leverage buyout groups out there who make acquisitions and immediately begin to think about how to sell the companies,” Sass says. “That is not what our goal is. We have a different strategy in that we are committed to our acquisitions for longer terms. We would like to continue operating in the manufacturing arenas in which we are knowledgeable. Our strength is holding onto companies longer and really bringing out the inherent strengths that typically are there – but are very much under-utilized.”