Former Westcon CEO to Take Helm At Electrograph

Smith is teaming with private-equity firm Caxton-Iseman Capital to buy Electrograph's parent company Manchester Technologies for $56 million in cash, he said.

Under the agreement, Manchester shareholders will receive $6.40 per share and the company will operate privately under the Electrograph name.

Manchester's board unanimously approved the deal, but it is subject to SEC approval and should take 75-90 days to close, Smith said.

Manchester, a former reseller, sold its professional services and consulting business to ePlus for $5.2 million last June.

"My history and Electrograph's history are as a value-added distributor, and we will continue that platform," Smith said.

Electrograph's current president, Sam Taylor, will remain in his position and will also invest in the company.

Smith said he looked at several companies after resigning from Westcon in May 2004. He was attracted to Electrograph because of its similarities to Westcon Group when he joined that organization in 1997, he said.

"I have the same thrill and joy I got [at Westcon Group] in 1997," Smith said. "I had a wonderful time growing that company. I see the same opportunity here. Westcon had a lot of talented people, good ownership. It was a phenomenal platform to grow on."

Electrograph had about $150 million in revenue in its last fiscal year ended June 30, 2004, and employs about 100 people, Taylor said.

Westcon Group grew to a $2 billion company when Smith was there as the networking space matured and vendors turned to distribution to serve customers. Smith expects the same for the display space.

"My first goal is to see [Electrograph] as a billion-dollar company," he said. "This is a $2 [billion] to $4 billion market, but only about 10 [percent] to 15 percent goes through distribution. Plus there is opportunity for growth of the market overall. Plasma is still growing at an advanced rate and LCD is becoming more of an adopted technology. Selling prices are coming down. Manufacturers are starting to realize more and more what a value-added distributor can do: sales, service, marketing, programs and building solutions."

Smith did not say why he left Westcon Group, which at the time had submitted SEC paperwork for an initial public offering. The Tarrytown, N.Y.-based networking distributor still has not gone public and one source at the company recently said it would not happen in the immediate future.