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The Dealmaker
June 2003 – Minneapolis Star Tribune
Since the mid-1970’s, Tom Auth has been involved in the acquisition of 20 companies – and all but two of the deals have been profitable. His latest role is as proprietor of a St. Paul firm that makes large-scale, digitally generated vinyl graphics.
Tom Auth is what you might call a serial entrepreneur.
Since 1976, when the former accountant joined a group of small-business investors, Auth has been involved as either ran investor or a corporate CEO in the acquisition of more than 20 companies.
It’s a journey that took Auth 58, into enterprises ranging from distribution of industrial supplies, automotive parts and mining tools to truck repairs, road construction and the sale of home appliances. And that was just during the 1970’s.
“It’s a character flaw,” Joked Auth, currently the proprietor of Vomela Specialty Co., a thriving St. Paul producer of large-scale digitally generated vinyl graphics for recreational vehicles, commercial truck fleets and retail sites. “I’ve never met a deal I didn’t like.”
Not exactly a flaw: Out of all those investments, Auth lost money on only two of them.
“And I was involved in management of only one of those two,” he said. “That one was back in the early ‘80’s, when we were paying 28 percent interest on our money in a business with 20 percent margins.”
Auth made his mark – and the cash to fund much of his wheeling and dealing – with an investment he made in 1980. That’s when he signed on as CEO and raised $400,000 for ITI Technologies Inc., a struggling North St. Paul start-up that manufactured wireless alarm systems.
Hectic deal-making
Over the next 20 hectic years, during which Auth built annual sales to $125 million, he took ITI public, sold it to a Swiss company, bought it back with the help of a New York leveraged-buyout firm, took it public again and finally merged it in 2000 with a Philadelphia firm to form Interlogix Inc. Interlogix was sold last year to General Electric.
The totals: more than $120 million of financing raised during the 20 years Auth was CEO, not counting the $78 million the Swiss company paid for ITI.
Auth’s payoff came to a tidy $4 million or so collected in 1989 with the Swiss sale – plus 7 percent of ITI’s shares, which got translated later into “a significant amount of GE stock and options.”
It was plenty enough to transform him into sort of a one-man venture-capital firm during the 1990’s. In addition to Vomela, which he bought in 1990 when it was a small contract producer of vinyl graphics for 3M Co., Auth has acquired an interest in a couple of trade-journal publishers, a chemical testing company, an ergonomic products designer and an aerodynamics engineering firm.
Oh yes, given his aforementioned compulsions, it should come as no surprise that he also was one of 14 investors who bought the grounded Sun Country Airlines out of bankruptcy last year.
His focus these days, however, is on Vomela, which has hoisted its revenue from $3 million in 1990 to $41 million from continuing operations in 2002 – headed for a projected $50 million this year.
Four-story display
He credits a large chunk of the success to retired Vomela CEO Dave DeGree, who nudged the company out of the low-margin contract business and into the creation of graphics for the exteriors of recreational vehicles, a market that now accounts for a third of annual sales.
But Auth had a hand in the growth, as well – predictably as the architect of three acquisitions that put Vomela into such markets as graphics for truck fleets and retail sites, clients that now account for more than half the business.
We’re not talking piddly little signage here, either. For example, Vomela recently won the contract to produce the new logos going onto the sides of United Parcel Service’s truck fleet. It also made the giant images of Cheerios boxes several years ago for a General Mills exhibit at the Mall of America.
The most impressive project, however, involves a scrolling graphic system that simultaneously changes the display in 165 windows several times an hour to produce a striking, four-story graphic for the Toys ‘R’ Us flagship store in New York’s Times Square.
All of which leaves the question of why Auth, despite his wealth, continues with his hyperkinetic exertions.
“I tried golf,” he explained. “It didn’t work.”