Operation Fusion

Entrepreneur Albert H. Frazier is making moves to position his emerging enterprise as a major player in the logistics and material handling industries. Frazier recently combined three separate acquisitions to create Goods Movement Inc.: W&H Systems Inc., a systems integrator and material handling supplier; North American Conveyor Inc. (NACI), which fabricates and installs conveyor and sorting equipment systems mainly for the United States Postal Service; and Total Transportation Services Inc. (TTSI), a non-asset based, third-party logistics provider.

Frazier worked quickly to execute his vision of strategically purchasing and operating middle-market business service companies. First, he finalized the purchase of NACI in May 2006. To help finance the acquisition, Frazier says he used money from the stock he had acquired in Accenture, the global management consulting, technology services, and outsourcing company, where he was an equity partner before venturing out on his own as an entrepreneur.

Black-owned private equity firm Fulcrum Capital Group saw the potential in working with Frazier and provided an additional $4 million in financing. “NACI was growing quickly and was profitable but only had one customer, which was the USPS,” says Brian Argrett, CEO of Fulcrum, which came aboard in late 2005. Fulcrum then served as lead outside investor in Frazier’s acquisition of TTSI with $4 million in financing. Dallas-based Aldus Equity also provided $1 million of Fulcrum’s initial investment. Frazier purchased a controlling interest in TTSI, where he is majority owner and CEO.

The final Goods Movement component came with the acquisition of W&H Systems. Having already provided $8 million in financing, Fulcrum Capital exited as lead investor and Frazier refinanced with commercial finance firm NewStar Financial. Providing a total of $53 million, Jeff French, NewStar’s managing director and head of West Coast operations, says those dollars not only helped with the buyout of W&H but also helped pay off existing debt and allowed for the financing of day-to-day operations as well as other capital expenditures.

After purchasing TTSI, Frazier found it more efficient to finance all three companies as a single entity and thus formed Goods Movement, which posted revenues of $133 million in 2006 on a pro forma basis. Revenues for 2007 are expected to increase to between $140 million and $150 million.

Marvin Turner, founder of financial and management advisory firm Black Arrow Advisors Inc. and a member of the National Black M.B.A. Association, says Frazier’s strategy of combining three separate companies as a single entity was a good move that other entrepreneurs entering the service industry can achieve as well.

Initially, there will be limited integration amongst the three merged companies. However, Frazier will launch cross-marketing initiatives and position Goods Movement to pursue more acquisitions. “It [is] a platform to allow us to do other deals going forward.”