Awards : 1997

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Winner - 1997 - Dealmaker of the Year Award

M&A International
Amsterdam, Holland
Program Manager - Bill McDonald

In May 1996, Capital Alliance was invited to address the annual meeting of USConnect shareholders in Park City, Utah after an unsolicited offer was made to the group by Alco Standard Corporation. Capital Alliance was chosen by USConnect over several other investment banks, including Merrill Lynch, to represent the selling shareholders. The following is a summary of these transactions.

The Selling Companies: USConnect is an affiliated group of 30 privately-held international computer network systems integration service companies. This group is coordinated through their collective ownership of USConnect Inc., based in Stamford, Connecticut. They are the fifth largest LAN/WAN systems integrator in North America with gross revenues in excess of $200 million annually.

USConnect offers a range of computer systems services. Focus areas include: consulting, network integration, systems integration, training, project management, database design/implementation and software application development. With superior expertise in solving multi-vendor systems integration issues, USConnect helps clients achieve more efficient, cost-effective operations by leveraging the latest networking technology and computer environments.

Why These Companies Were Sold: USConnect believed it had reached its maximum potential as an independent organization because of capital and operating constraints. The group had already discussed the advantages of a merger with a large, strategic partner.

Capital Alliance's Performance: In only four months, Capital Alliance generated offers for the USConnect group from seven multi-billion dollar public companies. All seven of these potential acquirers were computer related companies that fit strategically with USConnect.

Approximately one-third of the USConnect group accepted offers from IKON Office Solutions, an operating division of Alco Standard Corporation (NYSE). Other members of the group accepted offers from Inacom Corporation (NASDAQ).

Terms of the Transaction: Capital Alliance negotiated separately on behalf of each company in the USConnect Group. Each transaction was different. The selling shareholders received compensation ranging from all cash to all stock. Many transactions were structured under pooling rules with 100% of the seller's consideration paid at closing. Most of the selling shareholders wanted to remain active in the industry and received generous personal compensation and incentive bonus plans from both acquirers.

The Acquiring Companies: Inacom Corporation is a $2.2 billion computer equipment distribution company listed on the NASDAQ exchange. Inacom's strategic interest in USConnect stems from their decision to rapidly grow their technology management and service division as part of their overall plan to be a single-source, long-term provider for their customers. Alco Standard Corporation is a $10 billion office equipment and office supply distribution company listed on the New York Stock Exchange. Alco's strategic interest in USConnect stems from expansion of their office equipment capabilities beyond copiers into computers and computer services through their IKON Office Solutions division.


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