Workflow Management, Inc.

1927–1998

Workflow Management, Inc. tries to simplify its clients' business operations by taking care of all of their print and office supply needs. The company's goal is to help clients cut costs by reducing storage and distribution inefficiencies, rather than by just offering the lowest bid for a print job. Workflow can produce printed materials such as envelopes, invoices, annual reports, and direct mail pieces at one of its dozen manufacturing facilities, or it can act as a print distributor and send out jobs through its network. Once the materials are printed, they can be stored at one of Workflow's warehousing facilities in order to cut down on the client's storage requirements. Workflow's online ordering system, iGetSmart, allows clients to view reports on past deliveries and product consumption and uses a prearranged profile to help them order the right products and stay within budget. While online, clients can also order general office supplies or process an urgent print job using the print-on-demand feature. Workflow rounds out its range of services by offering workflow consulting and document design. The company's clients range from small businesses to corporate giants such as Wells Fargo, Kraft Foods, and Chase Manhattan Bank. Workflow was incorporated in 1998, but it has its roots in a small Virginia printer that merged with a New York firm in 1988 and grew rapidly throughout the 1990s by acquiring dozens of smaller print distributors.

Standard Forms, A Small Print Distributor: 1927-88

Workflow's history can be traced back to a regional print distributor known as Standard Forms. For about six decades, Standard Forms operated as a small but successful print distributor in Norfolk, Virginia. The company was originally established as Standard Salesbook Company in downtown Norfolk in 1927. The founder, S.S. Bohannan, already owned a printing plant in nearby Newport News as well as a plant in Sturgis, Michigan, both operating under the name Sturgis Newport Business Forms. Bohannan founded Standard Salesbook to act as a sales division for the manufacturing facilities. But Standard Salesbook did more than just direct business to Bohannan's plants; it operated as a general print distributor, brokering out print jobs to outside facilities. Salesbooks sold well, but eventually Standard Salesbook changed its name to Standard Forms to indicate that it could also produce other types of business forms. For the next few decades, Standard Forms operated successfully as a sales intermediary for print jobs.

In the 1970s Standard Forms bought its own printing equipment and set up a manufacturing facility at a new headquarters in east Norfolk. Sales and executive offices moved to this site as well. For the first time, Standard Forms could process jobs internally. Nevertheless, the company continued to send some jobs to outside printers since its own print capacity was limited. At the time the new headquarters was built, Standard Forms had about 30 sales representatives and had opened a few branch offices on the East Coast. By the mid-1980s the company had opened branches in New York City, Boston, Philadelphia, Milwaukee, Portsmouth (Virginia), Richmond (Virginia), and in New Jersey. All of the offices operated under the name "Standard Forms" except for the Milwaukee office, which was known as "Accurate Business Forms."

Merger and Rapid Growth: 1988-95

At the time, Standard Forms had annual sales of about $17 million; the merger brought that figure to $23 million.

1986–2002

In 1988 a merger with a New York firm set Standard Forms on the course that would transform it into an industry leader. The merger came about when Tom Cunningham, the president of Standard Forms in the 1980s, became acquainted with Thomas D'Agostino, who owned a paper and office supply distributor in New York City known as Forms and Peripherals. In 1986 D'Agostino had gone through a difficult year: his friend and business partner Robert Clemente died and he lost his largest account. In a casual meeting with Cunningham, D'Agostino expressed interest in taking a closer look at Standard Forms. The business appeared sound, so in 1988 he acquired majority control of the company and merged Forms and Peripherals into Standard Forms Inc., or SFI. At the time, Standard Forms had annual sales of about $17 million; the merger brought that figure to $23 million. The employee owners of Standard Forms approved the transaction unanimously, anticipating that it would give them a better presence in New York.

From the beginning, D'Agostino and Cunningham planned to develop the firm with an aggressive acquisition strategy. They chose this approach over internal growth because they found it difficult to hire new sales representatives--many of them had signed noncompete contracts with previous employers. A better strategy was to purchase an entire small office. Accordingly, SFI put out the word through trade journals and word-of-mouth that it was looking to buy, and by 1994 the company had acquired 14 separate firms. Most of them were small businesses along the East Coast with sales of $2 million to $3 million. Generally, SFI would provide a small down payment upfront and then pay off the remaining purchase price over the years with a dedicated percentage of revenue. The firm would be fully integrated as a branch office of SFI, with the former owner of the business often continuing to manage the branch. One particularly notable acquisition was the purchase of the print manufacturer Hano Business Forms in early 1993. Hano was a major manufacturer with plants in Springfield, Massachusetts; St. Louis, Missouri; and Conyers, Georgia. This purchase turned SFI into a true manufacturer and allowed it to fulfill a larger number of its contracts internally.

While the economy as a whole was suffering in the early 1990s, SFI was expanding and enhancing its services. In addition to the acquisition activity, SFI began implementing a technological development program early that decade. The company spent $3.5 million over two years for new hardware equipment and a custom-designed software package that was more in-depth than off-the-shelf products. The result was a computer system that allowed customers to order online and track inventory electronically. Clients could call up reports showing purchasing activity over the past several years, making it possible to tailor orders to annual fluctuations in usage of office supplies and printed goods. This system was operating by the end of 1993 after an early programming mistake that delayed the launch of the new system and cost SFI $500,000. Other service enhancements that were introduced during this time included "just-in-time" printing that saved clients from having to store large inventories and a pricing program that wrote a baseline price into the contract and gave the client a quarterly overview of any errors, late deliveries, and changes in purchase amounts. SFI also added new product lines such as general office supplies, janitorial supplies, and promotional products so that the client could receive a single invoice for most consumable office items. The service enhancements of the early 1990s were part of an industrywide evolution from basic print distribution to the more service-oriented "forms management."

In 1995 SFI acquired three Atlanta-area firms: the printer Indelible Inc. and the forms management companies Creative Business Systems and Data Formation/Prime Source Group. This purchase gave SFI a total of 17 branch offices along the East Coast and a half dozen distribution centers. Sales had grown from $45 million in 1993 with 120 employees to $309.4 million in 1995 with 275 employees. The firm decided it was time to pursue a public listing. A registration statement was drawn up and underwriters were selected--but at the last minute, U.S. Office Products Co., a fast-growing Washington-based company, approached SFI about a possible acquisition. The initial public offering (IPO) was postponed and in January 1997 U.S. Office Products bought SFI for about $65 million in stock.

Creation and Expansion of Workflow Management: 1998-2002

1992–2001

Only a year later, however, U.S. Office Products carried out a restructuring to divest itself of peripheral operations. The Print Management Division--formerly SFI--was spun off in June 1998 into Workflow Management, Inc., a new corporation based in Palm Springs, Florida. The company began trading on NASDAQ under the symbol WORK. Thomas D'Agostino was chairman and CEO of Workflow and his son Thomas, Jr., was president of the SFI subsidiary. They planned to continue expanding on the same pattern as SFI, buying small printing companies and integrating them as branch offices. Later that same year Workflow bought Penn-Grover Envelope Corporation, a Long Island-based printer of envelopes and direct-mail products. The company was expected to contribute annual revenues of around $15 million. In November Workflow also purchased the New York company Direct Pro LLC for $7 million.

Workflow started 1999 with another string of acquisitions. In February, March, and April the company spent more than $50 million for six firms collectively expected to generate annual revenues of about $90 million. The companies were Pacific Admail of California, a producer of direct mail materials; Freedom Graphics Services, a New Jersey print distributor; Premier Graphics of Columbia, South Carolina, a maker of high-end labeling material; the commercial printer Sundog Printing Limited of Alberta, Canada; Universal Folding Box Co., Inc. of New Jersey, a maker of printed packaging; and the New York City-based Superior Graphics, Inc. These companies brought in clients including Caterpillar, Coca-Cola, and Microsoft. A few months later Workflow made its largest single acquisition yet, paying $14 million for Graphic Management Corp. of Green Bay, Wisconsin, a print distributor with sales of around $30 million. This company's clients included Kraft Foods and Kay-Bee Toys (which would cause trouble for Workflow a few years later). In October Workflow paid $8.9 million for two Anaheim, California-based printers, Sundance Litho, Inc. and Irvine Commercial Printers. The company also made a few other small acquisitions that year and sold its print manufacturer Hano because of declining sales. By the end of the year, Workflow was the largest print distributor on the East Coast.

In mid-1999 Workflow created iGetSmart.com as a separate business unit for its online ordering system iGetSmart. The company was planning a public offering for this unit, and anticipation of the IPO pushed Workflow's share price to three times its usual trading level in late 1999. But the subsequent bear market for technology stocks led Workflow to cancel the offering and create iGetSmart.com, Inc. as an independent subsidiary in 2000. Tom D'Agostino, Jr., became CEO of iGetSmart.com and Roger Kimps, former president of Graphic Management Corp., replaced D'Agostino as CEO of SFI. The new subsidiary was preparing to make Workflow's internal e-commerce system available to other print distributors through licensing agreements. For example, in late 1999 the large international printer Quebecor Printing of Montreal signed an agreement to use iGetSmart for its own customers, and in early 2000 American Identity, a Missouri-based distributor of promotional products with more than 20,000 corporate accounts, bought a license for iGetSmart.

Acquisitions also continued through 2000 and into 2001. In early 2000 Workflow bought ALF Graphics, Inc., a print distributor in New York City with $8 million in annual sales. In March Workflow made its largest acquisition ever when it bought Office Electronics, Inc. of Chicago, a $55 million company. Workflow sold the company's print manufacturing facilities and retained the sales force only, thereby nearly recovering the total cost of the acquisition. Office Electronics greatly expanded Workflow's presence in the Midwest, with sales offices in Des Moines, Minneapolis, Cincinnati, and Milwaukee. The company also had offices in Houston, Dallas, and Nashville, which were new locations for Workflow, as well as offices in several other major cities. In late 2000 Workflow purchased two companies that outsourced promotional products and advertising specialties: For Magic Results, Inc. (dba A-lad-in Advertising Company), located in Great Neck, New York, and Inform Graphics of Beaverton, Oregon. The acquisitions of the last few years brought Workflow's annual sales to $547.1 million in 2000 with a net income of $23.15 million.

Workflow's purchases in 2001 included Webtrend Direct, Inc. and Webtrend Graphics, Inc., two direct-mail and commercial printers based in southern California. In July the subsidiary iGetSmart.com bought Document Options.company of Nashville. This company offered workflow consulting and print outsourcing and like iGetSmart.com was focused on reducing hidden costs for customers. In April Robert "Rick" Wesley became president of the SFI subsidiary, replacing Roger Kimps who was returning to his home state of Wisconsin. Wesley had joined SFI as a mergers and acquisitions consultant in 1992 and subsequently played a large role in promoting iGetSmart.com.

2002–2004

Focusing on Integration: 2002-04

In 2002 Workflow's acquisition spree came to an end as the company shifted its focus to integration of its many branches. Annual sales that year were $619 million, but net profit was only $9.2 million. After a difficult year, longtime CEO Thomas D'Agostino, Sr., stepped down in early 2003; he was eventually replaced by Gary Ampulski, former president of the document and forms companies TAB Products Company and Moore North America. Board member Gerald F. Mahoney replaced D'Agostino as chairman, and Thomas D'Agostino, Jr., was terminated as a division president. The new management faced a growing debt problem. Loans totaling $50 million were due in 2003.

Meanwhile, the SFI subsidiary adopted a new image in 2003, changing its name to "Workflow" with the motto "consult create connect." The company launched a "Business Revolution" marketing campaign emphasizing its ability to improve business processes, cut costs, and connect companies with products from a variety of manufacturers.

A net loss of $39.9 million for fiscal 2003 exacerbated Workflow's financial problems. Contributing to the company's difficulties was the fact that its client KB Toys Inc., which owed Workflow $5 million, was going through bankruptcy proceedings. Leadership at Workflow was divided over whether to seek refinancing or accept an offer to go private. In the course of the conflict, CEO Gary Ampulski was terminated after less than a year at Workflow. He claimed that the board was neglecting shareholder interests by rushing into a private buyout proposed by the private equity firms Perseus LLC and Renaissance Group. One of Workflow's major shareholders, Pacific Coast Investment Partners, also opposed the merger and proposed several alternate recapitalization plans. Nevertheless, in April 2004 Workflow succeeded in gaining 70 percent shareholder approval for a merger into WF Holdings Inc., a private company created by Perseus and Renaissance for the purpose of the deal. The equity firms had boosted their per-share payment twice in order to gain approval. The new CEO of Workflow was Greg Mosher of Renaissance Group. Mosher said he looked forward to guiding the company into a new era based on its existing customer base and services.