The 2024 acquisition season is ending with a bang, courtesy of the Dec. 13 announcement that Donnellon McCarthy Enterprises (DME) had purchased Ohio Business Machines (OBM). One of the things that stood out about the deal was how close the companies were in terms of annual revenue: DME of Cincinnati is about a $25 million performer while Cleveland-based OBM checks in somewhere north of $20 million.
Sadly, the transaction comes against the backdrop of OBM losing its founder and president, Sal Spagnola, who passed away last June. However, the company will continue on under its own name as “A DME Company,” thus maintaining its identity with clients while also benefitting from the added firepower offered by DME. In this edition of Two-Minute Drill, President Jim George and CEO Jim Donnellon sat down with ENX Magazine to discuss the synergies and complementary offerings that will benefit the clients of both organizations while enabling DME to gain more traction with its five-year business plan.
What can you share about how this deal came together? How long was it from the initial talks to the handshake?
George: Unfortunately, with Sal’s passing, we’d heard through the grapevine that there might be an opportunity to acquire them. Obviously, we didn’t want to be the first one to call and ask what their plans were for the business. Eventually, we made a connection through mutual acquaintances we’ve worked with for some time, and got into conversations pertaining to acquisitions. [OBM] told us they were looking [for a buyer] and had several companies looking at them. One day, probably about three months ago, Jim Donnellon and I jumped in a private jet and flew from Cincinnati to Burke Lakefront Airport, which is right behind their office, and we were picked up by [OBM’s] leadership team. They were quite impressed that we made that investment, and we made it clear that it was an investment for both companies. We were able to close that deal Dec. 12. I’m in Cleveland now, working through it all.
Donnellon: We’re just trying to attain our goal of being coast to coast. It just came together and it was a really good fit for us, because it complemented what we do and don’t do, and vice versa. It’s a good marriage and it allows us to pretty much run the state of Ohio, which is what we wanted to accomplish, too. It’s just another move forward toward our future plans.
There are some significant players in Ohio, especially in the Cincinnati area.
George: We are truly the only dealership that handles every single ZIP code in Ohio and have multiple offices throughout the state.
What are some of the aspects of OBM that you found most compelling?
George: First and foremost, OBM carries Ricoh and Sharp, which are fantastic product lines. That was important to us. They’re very strong in IT/managed network services and cybersecurity. One of the areas that they have a real heavy focus on is physical security and cameras. There are grants available that help fund security solutions for hospitals, schools and just about everywhere. Clients want these camera systems with AI built into them; with facial recognition, you can know exactly where someone is in a building. [OBM is] very strong with that offering and they’ve amassed a sizable team that has been growing it. I see a lot of growth opportunity with it for the DME side of the business.
Between revenue and team members, the deal nearly doubled your size. With OBM doing business as “a DME Company,” and having numerous locations, will that make the integration process smoother?
George: Even before we closed on the deal, we had a growth model and a five-year plan that will be driven by organic growth and acquisitions. Looking at the acquisition side, the size of their organization has absolutely made it the easiest integration process that I’ve been through. We have every intention of being fully integrated by month’s end. We’re on the same CRM [as OBM], and the back office is run by the same software. I think both companies’ mindsets are quite similar and extremely customer-focused. So the integration has been wonderful. And like I said, it’s going to be the quickest integration that I’ve done. Sometimes when you buy smaller companies, you have one or two people doing so many different jobs, and you’re always trying to figure out “Where do I put that? How does that fit into this business model of ours?” We don’t have that problem here. This is, for me, a match made in business heaven.
Donnellon: The transition is going to be very smooth and Jim’s got a good handle on it. We’ve got a stellar, really fabulous executive team. It’s important to note that we will operate Ohio Business Machines in the future as “a DME company.” We’re not going to make the same mistakes others have made by changing names. We’re going to keep their legacy going.
How does this addition change your goals and outlook for 2025? What are your expectations?
George: Jim and I have a five-year plan and we know exactly what we want to do. We want to go coast to coast and be a preferred vendor that’s a private company. The deal doesn’t change our 2025 outlook as much as you might think. We intend to make some announcements in 2025, and our number-one goal is to continue to make them. So stay tuned, there’s more to come. In 2025, we’re obviously going to be over a $50 million company. We’re getting into the top brackets of the private family-held businesses and we’re pretty proud of that. We want to keep on that track.
Donnellon: I still enjoy the chase. I’m not in the foreground of the company. Jim is running these operations 100%, but every once in a while, I sneak out of the woodwork and I buy something [laughs]. So I’m still involved but only really on the financial and the legal side. I’m thrilled with this acquisition, and we do have one or two fairly large acquisitions in the mix currently. We’re just getting started.
What kind of companies might you be looking for in 2025?
George: I look for several different dynamics. Foremost, we really would like the owner or the lead person in the organization to stay on for three years to maintain continuity. And we’re looking for companies where we can enhance what they’re doing and help them catapult their own growth model. So we’re not looking for just a [machines in field] transaction. As far as size, a $5 million business is nice, but if we can get into the $10-plus million or $20-plus million range, that’s even better. But we will look at a $2 million business if it makes business sense and can be integrated into our organization.
I don’t believe in a contiguous model, not in today’s world when tech can keep you in close contact. If [a prospect] is in the middle of Washington state, Idaho or Maine, we would consider them as long as they fit into our business model and we’d have to fit into theirs. It has to be a marriage that makes sense to both sides. We’re not a private equity firm that’s just looking to buy your MIF. We’ve made eight acquisitions in the last eight years, and we’ve kept the companies’ names, as “a DME company.” It’s important if we’re acquiring companies in smaller cities to keep that hometown flavor while enhancing their capabilities, whether it’s IT services or EV charging stations. There’s a lot of different opportunities where we can help grow a smaller business by giving them the back-office support and really help them grow. We’re really looking forward to 2025.
