On Jan 15, 2010, Polaris Library Systems announced that it has changed ownership through a management-led buyout of the company. At ALA's Midwinter Meeting in Boston, the company made public the news that the executives had purchased the company from Croydon Company, a privately held holding firm. This transition places Polaris among the companies owned by the executives that manage the company rather than by outside investors.
The Croydon Company had owned Polaris since its inception as the library automation division of Gaylord Bros., one of the veteran companies of the industry, established in 1896. The principals of Croydon included Morris Bergreen, President, and Martin Blackman, Vice President. With the death of Morris Bergreen in 2001, Adele Bergreen took the role of President. The Croydon Company has stayed mostly behind the scenes and has not been actively involved in the day-to-day operation of the company.
In order to gain ownership of the Polaris Library Systems, a new company called PLS Partners was formed, itself owned by a group of Polaris employees. Employees involved included CEO and President Bill Schickling, Chief Operating Officer Anita Wagner, Chief Information Officer Jim Mieczkowski, Chief Financial Officer Chuck Petty and VP of Marketing and Sales David Bendekovic. In addition to these existing employees, Jim Carrick, a Syracuse businessman, joined the company as Senior Business Advisor and participated in the buyout.
The transaction concluded on Dec 22, 2009 but was not announced until Jan 15, 2010. It involved a package of financing arrangements to enable the acquisition of the company without the involvement of venture capital or private equity. The incumbent owners, Croydon Company, apparently had confidence in the management, and provided support for the sale through transitional financing.
The total amount of the sale was not revealed. PLS Partners was represented by The Jordan, Edmiston Group (http://www.jegi.com/) as its financial advisor in structuring the buy-out.
An additional component of the financing involved a $1 million loan provided through Empire State Development, an economic development agency of New York state government. The announcement issued by ESD indicated that the loan, to be paid down over a 6-year period, was given to help support the greater Syracuse economy. Loan terms also specify that Polaris will add another nine jobs based in NY by 2013. Polaris currently has 65 jobs based in the greater Syracuse area, with another 15, primarily sales representatives, that live and work in other locations throughout the country.
Background on Polaris
The company we know today as Polaris Library Systems has a long and interesting history. It was founded in 1974 as a business unit of Gaylord Bros., a large company with multiple interests, especially as a manufacturer and distributor of library furniture and supplies. Gaylord Bros. itself was founded in 1896 by Willis and Henry Gaylord in Syracuse, NY. In 1930 Gaylord Bros. created the first library automation product with its Model C Book Charger, which used a mechanical system of date stamps on cards to manage the circulation of library materials.
Gaylord Information Systems was founded by Croydon trustee Morris Bergreen in 1974 in order to develop, market, and support products related to computerized library automation. Gaylord Information Systems became one of the pioneers in this emerging industry. One of the first products of the division was the Gaylord System 100, a hybrid system that included both computer equipment located in the library and the use of mainframe equipment housed by Gaylord for overnight batch processing of circulation data. The distribution of computer processing between real time transactions at the library customer site and batch processing performed remotely was a unique arrangement for the time. Over its first 15 years, Gaylord produced a series of products for automated circulation and catalog control.
In 1989, Gaylord introduced its first fully integrated library automation system, Galaxy. The development of Galaxy was led by Bill Schickling, who joined the company in 1987. This product, adopted primarily by smaller libraries, was designed for the VAX/VMS platform. After the demise of VAX/VMS, Gaylord elected to build a new automation product from the beginning rather than port Galaxy.
Gaylord Information Systems launched Polaris in 1997, a new integrated library for both the client and server components system that was based on the Microsoft Windows platform. Polaris at least initially targeted larger libraries and consortia, though it has since been adopted by all public libraries of all sizes. Polaris, though it has found use in large consortia of libraries since its introduction, has only recently broken into the municipal library sector, with its selection for the public library systems that serve Phoenix, Dallas, and Miami-Dade County.
Since the introduction of Polaris, the company has gradually phased out Galaxy. Today only a small handful of libraries continue to operate this legacy ILS, with its complete extinction immanent. Gaylord Information Systems went through a major transition in May 2003 when Croydon sold Gaylord Bros. to Demco, its major competitor in the library furniture and supplies industry. The automation division was not included in the sale. Demco has continued to operate Gaylord as an independent, wholly owned subsidiary, based in Syracuse.
Following the sale of Gaylord Bros., the automation division remained under the ownership of Croydon Company. The sale of Gaylord Bros. to Demco included the rights to the corporate brand. At this time, the company began operating under the name GIS information Systems. Katherine Blauer, President and CEO of Gaylord Information Systems exited and Bill Schickling was appointed President and Chief Executive Officer of GIS Information Systems. Prior to his appointment as CEO, Schickling had advanced into roles of increased responsibility: 1990-1996 programming manager; 1996-1999 director of programming for Polaris; 1999-May 2003 VP for Research and Product Development.
Operation as a standalone company meant significant downsizing from its former structure as a business unit within a larger corporate organization. GIS Information Systems reduced its workforce of 105 that it employed in 2002 to 65 in 2003. Since that adjustment, the company has steadily grown in personnel to the 80 that it employs today. In May 2005, the company began operating under the name Polaris Library Systems, taking as its corporate identity the name of its flagship product.
Jim Carrick joins Polaris Library Systems as a new principal, both as an investor and as the company's new Senior Business Advisor. Carrick has been a long-time businessman in the Syracuse area, most recently as President and owner of Strategic Computer Solutions (SCS), a firm involved with reselling IBM products and services that employs about 130 people. SCS was ranked as the 10th largest IBM Business Partner in the United States. In Sep 2007 Carrick sold SCS to Sirius Computer Systems, a larger Dallas-based company also involved as an IBM reseller. SCS was originally founded in 1977. When Carrick acquired the company in 2002 it earned about $16 million annually. In 2006 SCS earned $95 million. With this background, Carrick brings to Polaris strong executive management experience in an IT-focused company, but also a shared interest in the local economy in the Syracuse area.
Perspective
Polaris has stood out in the library automation industry as a particularly successful company in recent years, both in terms of its ability to make new sales and to earn high levels of satisfaction from its customer libraries. It has demonstrated the ability to attract libraries away from the legacy products—and occasionally the flagship ILS—of its main competitors. The company has seen steady growth in the number of libraries using its products and has grown its workforce accordingly. Polaris has maintained a focus on public libraries and has avoided the temptation to extend itself into other sectors of the market. Until recently it has marketed within the confines of the United States, only recently extending its reach into Canadian libraries. On the technology front, Polaris has kept within a single platform based on Microsoft technologies rather than attempt to support a wide range of hardware and software options. Through working within defined parameters in its market and technology strategies, Polaris has been able to prosper as a medium-sized company with limited resources.
The recent events at Polaris Library Systems bear likeness to the partial management buy-out that took place in 2007 with Mandarin Library Automation, a company involved with automation products primarily for K–12 school libraries. In July of that year, the three key executives of that company acquired half of the company stock from EGEG Holdings. It's also similar in that EGEG had sold its larger business interest, SIRS Publishing, to ProQuest in 2003, retaining control of its business unit involved with library automation.
The management buy-out at Polaris Library Systems means continuity and stability. This transaction moves Polaris into the category of companies within the library automation industry owned by the individuals that manage them rather than by external investors. Since the sale of Gaylord to Demco, the question of its ongoing ownership has been uncertain. While Croydon Company initially elected to retain its library automation business after divesting Gaylord Bros. to Demco, it was expected that at some point that it would eventually sell, opening up many possible scenarios. Had the management buy-out not occurred, the company remained vulnerable to acquisition by a competitor or by a private equity firm from outside the industry. Acquisitions among competitors usually mean consolidation of products and possible disruption to the libraries involved with the company's products. Going forward as an owner-managed company, Polaris will not be deterred from the continuation of the business strategies of recent years that have proven successful. Libraries using its products should breathe a sigh of relief knowing that they should be relatively safe from the disruptions often associated with other flavors of business transitions.
