In late June, Baton Rouge-based EMCO Technologies announced it had spun off its communications division, which specializes in the sales and servicing of two-way radio and emergency alert systems, and sold it for an undisclosed price to Dallas-based BearCom, the largest Motorola dealer in the U.S.
EMCO Technologies’ IT division, which services large petrochemical companies and federal government contractors, was not part of the transaction and remains under local ownership, as Business Report details in a new feature.
The decision to sell the communications business might have taken some by surprise. EMCO was built around the two-way radio business, and for most of its 56-year history was owned by the same Baton Rouge family that founded it. The group that had acquired it in 2012 also was local, and had grown sales and profits over the past six years.
But the sale of the communications division—which comprised a relatively small piece of EMCO’s overall business—made sense for a couple of key reasons, says Pat Cuntz, who was president of the communications division and now is vice president of the newly rebranded EMCO/BearCom.
For one, the communications industry is changing and Motorola, which manufactures the popular two-way radios, has been migrating towards partnerships with fewer, larger distributors, making it harder for smaller dealers to compete. EMCO, which declines to provide revenue figures, was relatively small compared to a company like BearCom, which has been on an aggressive expansion and acquisition spree in recent years.
“We knew the only way we could get there was through our own acquisitions,” Cuntz says. “So that wasn’t the deciding factor, but it was certainly one of them.”
Also, as the industry has changed, there has been less synergy than in the past between what was the communications side of EMCO’s business and the IT division, which was much larger in terms of revenues and employees.
After on-again, off-again talks that began in 2014, the two companies finally reached an agreement earlier this year.
Under the new deal, both clients and longtime employees of what was EMCO’s communications division will benefit, Cuntz predicts. BearCom has deep pockets and will be able to invest in new technologies and cutting-edge services.
