A 25-year-old Tempe spinoff of MicroAge has acquired another local company to expand its business into new markets.
Tempe-based enChoice Inc., an enterprise content management solutions company, bought Tempe-based ImageTag, bringing its KwikTags digital transformation solution and Microsoft capabilities into the merged company, said Tony White, CEO and founder of enChoice.
“This acquisition brings us more into the mid-market, which is more Microsoft-oriented,” said White, whose company mainly uses IBM technology. “This is quite important to round out our potential for a larger marketplace.”
The acquisition was a stock-based transaction and the financial details were not disclosed, other than a $5 million SEC filing that White said was “absolutely arbitrary.”
“Because it was a stock-based transaction, it was governed by SEC rulings. We had to create a nominal value,” he said.
The combined private company revenue is $25 million, with $30 million expected this year, White said.
White previously served as ImageTag’s board chairman. When the opportunity arose for them to merge, White said it made sense since both companies are involved in helping businesses with their digital transformation.
“We realized we could save a lot of money by not duplicating all kinds of functions,” said White, adding enChoice did sell ImageTag’s products prior to the merger. “Now we can cover a much bigger marketplace.”
White founded both predecessor companies to enChoice, including ICI Solutions Inc. and enTechnologies Corp. He spent 15 years with IBM, where he advanced to a senior position before leaving to launch the startup.
EnChoice spun off from MicroAge Inc., a Tempe-based public technology sales company founded in 1976 that went bankrupt in 2001. It originally was founded on the concept of digitizing paper documents.
The company has 1,200 local and national customers, which include the city of Mesa, Arizona State Retirement System, City National Bank, Geico Corp., Honeywell International Inc. (NYSE: HON), GameStop Corp. (NYSE: GME) and Children’s Miracle Network Hospitals.
The combined company now has 125 employees, with 65 in Tempe and the rest spread around the country, including an office in Connecticut. ImageTag’s 40 employees joined enChoice, White said.
The company is hiring constantly and plans to add at least another 10 people in the next 12 months, White said.
“The merger will accelerate our growth, and we expect to ramp up our hiring rate,” he said.
The two are merging offices, using ImageTag’s office at 1400 E. Southern Ave. in Tempe. EnChoice has started moving in, and White said the move will be complete by the end of the year.
“They (ImageTag) had a larger office than we had because enChoice was much more dispersed,” White said.
ImageTag CEO Randy Eckel is retiring after he found the right home for his company.
“The merger was a logical step forward for ImageTag,” Eckel said in a statement. “We have reached the point where we have established our products in the Microsoft Dynamics market and are ready for the next level of expansion with our product portfolio and market opportunities.”