CRN Exclusive: Quest Solution To Merge With $25M Canadian Solution Provider

Quest Solution will nearly double its head count and expand its reach into Canada and the Eastern U.S. by merging with a $25 million solution provider.

The Eugene, Ore.-based company, No. 303 on the CRN Solution Provider 500, said joining forces with 70-employee Viascanqdata of Montreal will deepen existing relationships with mobile computing vendors Honeywell and Zebra-Motorola, enabling the combined company to obtain beefed-up incentives and more favorable pricing.

"Anytime you can combine your purchasing power into a single corporate entity, it allows us to be a bigger fish in a smaller pond," Scot Ross, Quest Solution's CFO, told CRN exclusively.

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The Viascanqdata deal will be Quest Solution's third merger or acquisition since January 2014 and is expected to formally close Wednesday or Thursday. Terms of the merger were not disclosed.

The combined entity will have roughly $110 million in annual sales, 150 to 160 employees, and the ability to support customers throughout the U.S. and Canada. Quest Solution is strongest on the West Coast, while most of Viascanqdata's customers are based in Canada or the Eastern U.S., according to Jason Griffith, the company's executive vice president of strategy and acquisitions.

The combined company has identified several areas where it can reduce cost redundancies, according to a company statement, with Ross declining to say whether or not that will include personnel cuts. Griffith said the combined company should be able to greatly increase its back-office workload without adding people.

Quest Solution said Honeywell and Zebra-Motorola are looking for solution providers to increase their purchasing volumes and favor partners that can integrate their products into a broader solution set rather than simply reselling them. Likewise, end users are looking to lower costs and improve supply chain efficiencies by reducing the number of vendors and partners they work with, the company said.

Both companies have strong distribution relationships with Ingram Micro and ScanSource on the computing and data capture side of the business. Viascanqdata and Quest Solution each also has media businesses focused on paper, ink, ribbons and labels, working closely with vendors such as Avery Denison and UPM, Ross said.

Ross said Quest Solution will be able to greatly increase its media production and label capabilities by leveraging Viascanqdata's recently built media manufacturing facility in Ajax, Ontario. Quest Solutions today has only a small converter facility in Southern California, Ross said; in contrast, Viascanqdata is one of the largest suppliers of labels and ribbons in Canada.

Quest Solution has a large presence in the health-care, manufacturing, retail and transportation verticals, according to the company's website. The company was founded in 1994 in a garage by Kurt Thomet and his son, Griffith said, and grew to $84 million in sales in its 2014 fiscal year.

Viascanqdata, meanwhile, has more than 4,000 end-user clients, including household names such as Cargill, L'Oreal and Unisource.

Client overlap is minimal, Griffith said, though the company looking to increase market share for its few joint customers by offering integrated, cross-border solutions.

The Viascanqdata deal builds upon Quest Solution's November 2014 merger with Bar Code Specialties in Garden Grove, Calif. Quest Solution has taken advantage of opportunities to expand into new product lines and geographies, as well as the number of solution provider CEOs looking to retire, according to Griffith and Ross.

Though Quest Solution does not use an outside firm to shop for mergers or acquisitions, Ross said Griffith is tasked with vetting any prospective M&A opportunities.

Moving forward, Ross said Quest Solution will continue to be receptive to merger and acquisition opportunities that fit into the company's strategic plan, favoring deals that focus on specific industries.

"You've got to kiss a lot of frogs to find the right princess," Ross said. "It's going to take a while to find the right ones."

PUBLISHED OCT. 12, 2015