Superior Uniform Group Inc. (asi/90266) has purchased Los Angeles-based distributor BAMKO, Inc (asi/131431). The publicly-traded supplier and uniform manufacturer paid $15.8 million cash, the company announced.
In addition, Superior Uniform Group will issue $5.5 million in shares of its common stock that will vest over five years and will carry a potential future payment of $5.5 million through 2021 for additional contingent considerations.
“We bought BAMKO to be the dominant player in their industry,” says Michael Benstock, CEO of Superior Uniform Group, in an exclusive interview with Counselor. “We don’t just want to be on the Top 40, we want to be at the top of that list. And with Superior’s capital and our ability to manage alongside the folks at BAMKO, I have no doubts we’ll be able to accomplish that. ”
Benstock says Superior had been searching the last two years for a partner to grow into the promotional products market. The company, which generated $210.3 million in net sales last year (including its subsidiaries), previously sold promotional products to its uniform customers. All promotional product business will now be handled through BAMKO.
BAMKO generated approximately $31.5 million in revenue last year. The distributor has subsidiaries in Hong Kong, China, Brazil and England as well as an affiliate in India, all of which are included in the transaction. BAMKO will operate as a subsidiary of Superior Uniform Group, and the principals will remain with the company.
Phil Koosed, CEO and co-founder of BAMKO, tells Counselor that the distributor was not looking for a buyer, but the opportunity to work with Superior was too good to refuse. “It was one of those things that was pretty much a no-brainer once we got to understand who their organization was from the top down and what they stand for,” says Koosed, who started the distributorship in college 15 years ago with President Brett Marz. “We had such similar core values that it really did seem like a match made in heaven.”
Benstock and Koosed say that BAMKO’s creative design capabilities and sourcing presence in China is the foundation for a scalable model with the potential to grow. By partnering with Superior, Koosed says the move will allow BAMKO to expand its distribution and warehousing, enhance its customer experience and allow the distributor to accept some of the growth opportunities it had turned down in the past.
Benstock says the natural crossover between promotional products and uniforms offer growth possibilities for both businesses.
“I’m a strong believer that you don’t buy businesses to fix them,” Benstock says. “We’ve done that over the years and it’s been O.K. It’s hard work. I’d rather buy a business that’s healthy and has strong leadership, and give them the support they need to grow their business faster. We see BAMKO as a catalyst for a great deal of growth with our existing customer base, and even customers we haven’t even touched in the past who are strong promotional product users.”
Superior Uniform Group operates through two segments: uniforms and related products and also remote staffing solutions. In its earnings release prior to the acquisition, the company projected over 6% organic growth for its uniform segment this year and average organic growth of 8% over the next three to five years.