Acquisitions Bolster A Firm’s Reinvention New: Products Turn a Forms Provider Into a Leading Supplier for Small Businesses

New England Business Service Inc. is transforming itself from a direct-mail business forms supplier to a diversified provider of products and services to small businesses. Acquisitions are key to the company’s strategy of redefining and broadening its markets at a time when technology is encroaching on some of its traditionally lucrative product lines. Since early 1997, the Groton, Mass.-based company has made acquisitions of companies that service the small business community. “We’re not after the business of the General Electrics of the world. Our ability to handle small orders economically and efficiently, with the kinds of gross margins that we have, distinguishes us from many other companies,” says Tim Althof, Investor Relations Officer of NEBS. In March 1997, NEBS acquired Chiswick Trading Inc., in Sudbury, Mass., adding retail and industrial packaging, shipping, and warehouse supplies to its product mix. Chiswick has a proficiency in an area where NEBS lacked experience – quick-turnaround, off-the-shelf product order fulfillment. Rapidforms Inc., an $80 million direct-marketer of business forms and supplies and promotional products, was added in December 1997. And in May 1998 NEBS agreed to acquire two units of ROMO Corp. – McBee Systems Inc. and McBee Systems of Canada Inc., which produce checks and related products for small businesses. Parsippany, N.J.-based McBee, with revenues of $63 million, brings to the fold a 350-person sales force – expertise that allows NEBS to establish on a personal level relationships with small businesses which thereafter would be maintained through direct mail. Although technology threatens to reduce some of NEBS’s core product lines, Althof is confident that his company’s strategy to expand into new products and services will offset any future loss of business. Checks, for example, which make up a significant proportion of NEBS’s business, are increasingly being replaced by direct deposit. Althof notes, however, that checks and other business forms are much more resilient in the small-business community than in larger corporations, which have the resources to automate processes. While the checks market is not growing in leaps in bounds, he says, it is growing, and small businesses are believed to be the last ones to go heavily toward direct deposit. In any event, the company continues to diversify its array of product offerings. NEBS is currently testing a line of direct-mail uniforms, jackets, and other corporate wear for small businesses sold through a catalog called Work Wear and experimenting with electronic kiosks where people can design their own business forms and electronically place orders. More than a half-dozen kiosks already have been placed in business centers in banks and in department stores, including Wal-Mart Stores Inc. “At some point the world will figure out a way to eliminate business forms altogether, but that is probably decades away, and by then we will have enough balance in our product lines to more than offset that loss in business,” Althof says. New England Business Service Inc.Business: Business forms and suppliesHeadquarters: Groton, Mass.Revenues: $263.4 millionNet Income: $18.6 million*Total Assets: $141.2 millionStockholders’ Equity: $80.6 millionFor fiscal year ended June 28, 1997.*Includes a one-time charge of $104,000.<\TBL>