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The Cerplex Group is taking outsourcing to Wall Street.
Outsourcing--the trendy term for when companies farm out repair, manufacturing or other services previously performed in-house--has typically been done by small, niche operations.
The several companies that now comprise Anaheim-based Cerplex used to be such small operations, too. But not anymore. Cerplex is raising money in the public markets to buy out more small competitors in order to form the first major nationwide computer repair company.
The company has grown explosively from its 1990 inception to $79 million in sales last year. So far, Cerplex has 17 facilities in six states. That already makes Cerplex the largest independent repair company in the country, according to CFO Bruce Nye. In Orange County, the company has two repair locations in Irvine, one in Anaheim and one in Santa Ana.
The company is so trailblazing, Nye says, that underwriters Donaldson, Lufkin, Jenrette Securities and Montgomery Securities had trouble pricing the company's IPO earlier this month, since they couldn't find any comparable companies. (The issue eventually went out at $11 a share, raising $27 million for 18% of the common stock.)
The IPO cash will help continue Cerplex's acquisition spree. "We've had a 100 compound annual growth rate for the past three years, and we're not uncomfortable with that growth rate," Nye says.
Cerplex plans on both straight acquisitions of smaller competitors and acquiring just the repair operations of clients. In the latter case, Cerplex typically buys the inventory and testing equipment of a company and takes over its in-house repair operation.
If Cerplex's national approach is new, the concept of outsourcing isn't. Many Orange County companies have increasingly relied on contracting out their manufacturing. service and other functions. At Kingston Technology Corp. in Fountain Valley, for instance, the fast-growing maker of computer upgrade products sends out all its products...