Memcom Agrees to Buy Client-Rich Software Firm
With an eye on lucrative U.S. government contracts, a British computer-filing systems company with its U.S. headquarters in Orange has agreed in principle to acquire a computer software firm near Washington, D.C., with a client list that reads like a federal agency gold mine.
Memcom International Holdings PLC of Watford, England, announced last week that it intends to purchase Automation Engineering Inc. of Falls Church, Va. The announcement didn’t disclose a sales price; Burdett Hallett, Memcom’s vice president of sales and marketing, said Monday that the purchase would be for new Memcom stock valued at nearly $2.5 million and $80,000 in cash. The acquisition is expected to be completed in early February, he said.
Although 8-year-old Automation Engineering employs only seven workers and posted fiscal 1984 sales of only $1.5 million, Memcom, which employs nearly 60 and had fiscal 1984 sales of nearly $8 million, has good reason to be interested in Automation Engineering’s client list.
That list includes the U.S. Army, Navy, Department of Interior, Department of Justice and the Social Security Administration. Two years ago, Automation Engineering signed a five-year, $2.7-million contract to design and install a turn-key electronic filing system for the Social Security Administration, according to Ben H. Owens, Memcom’s chairman.
Indeed, Washington, D.C., is fast becoming a hotbed of computer-filing systems sales, said Bruce Lechner, manager of systems development at Integrated Automation, a competing systems integration firm in Alameda, Calif. “There will be a significant amount of dollars flowing from Washington in information management,” said Lechner, whose firm posted sales of $30 million in 1984 and expects a 50% increase in 1985.
Glutted with information, government agencies are scrapping dated filing systems in favor of computerized systems that capture and index the information on microfilm. This represents a boon to companies such as Memcom that can provide both the software, hardware and technology that government agencies are looking for.
