Sleeping Giant

Precept quietly strengthens its hold on the No. 1 position

By Laura D'Alessandro

Dallas-based Precept has been keeping a low profile in recent years, but that doesn't mean the Goliath of distributors hasn't been keeping busy.

The company has maintained its No. 1 position on the Business Forms, Labels & Systems Top 200 Distributors list since 1993, topping the charts with $159.3 million in sales in 1997.

It has continued to expand its depth of services through a number of strategic acquisitions.

And in March, the company achieved a monumental step in the next stage of its development, going public. Precept can be found on the Nasdaq under the trading symbol PBSI.

David Neely, chairman and CEO, explained that current industry trends motivated Precept to take this daring step.

About two years ago, Neely and the Precept management team noticed some changes in the companies participating in the acquisitions arena.

"At that time we had made about 20 acquisitions," Neely explained. "All of a sudden, there was a new player on the field--Corporate Express."

Neely noted that as Precept continued to pursue acquisition opportunities, the company would come across Corporate Express in more and more instances.

"They were actively pursuing acquisitions in office supply and courier services. We started to run across them in the consolidation of business forms distributors. It was a surprise," he said.

As Corporate Express became further entrenched in distributor consolidation, Precept found itself at a disadvantage. Corporate Express used a "new kind of currency" to make its acquisitions, according to Neely.

"We always bought with cash," he said. "We were looking at a company that was coming in with a new kind of cash--stock. We weren't playing on a level field."

Neely explained that when Precept made a $10 million acquisition, the funding came directly from the company's capital. When Corporate Express made an acquisition using stock options, its capital was not affected.