OTG empire crumbles

Stuart Turk’s, former CEO of On The Go Technologies (OTG), dream of creating what he called an “empire strictly in IT” sadly came to an end after his company was acquired by FTS Group after having, what one outside source said, almost faced near bankruptcy.

Before its acquisition, Concord, Ont.-based OTG was a VAR and systems integrator that specialized in the hardware and solutions space in Canada and the U.S. Under its initial ownership and leadership with Turk, the publicly-traded company’s growth strategies included acquiring other resellers such as Infinity Technologies, CompuQuest and Helios/Oceana and targeting niche and vertical sectors that weren’t considered to be in the mainstream market place.

The company, which Turk said was once valued between $32 and $35 million as a result of the acquisitions, was purchased for $4 million by FTS Group, a Tampa, Fla.-based acquisition and development business that focuses on the IT industry. David Rasmussen, chief operating officer of FTS Group, said with the acquisition FTS Group is assuming OTG’s employees as well as all of its debts, which he said, are in the millions of dollars-range. Rasmussen was also named the new CEO of OTG.

“(OTG) was on the brink of bankruptcy,” Rasmussen said. “There was a lot of pressure put on (Turk) and (the situation) had to do with a funding issue. We’re now assuming all of their debt.

“When we looked at the balance sheets and we broke down all of the expenses, we felt the deal was an attractive one financially speaking because of the money we’ll be bringing in to turn this into a net income situation,” he added.

Turk said he sold his business to FTS Group in order to get himself out of the ­technology sector in order to embark on other industry verticals.

“I still own the majority of the shares of the publicly traded company, which is OTG Healthcare,” Turk said. “This will be under a new name in the next few weeks and I’ll be going into a different business altogether.”

Turk said the reason for this industry work change was due in large part to the lack of support both he and OTG received from the top distribution players in Canada.

“Distribution and the channel haven’t been too kind to (OTG). The sales were there, it’s just that Ingram Micro, Tech Data and Synnex haven’t cooperated with us. They didn’t like our business model and they didn’t understand our strategy for growth.”

Jim Estill, CEO of Synnex Canada, one of OTG’s long-time distributors, said he had been aware that the company had been going through some financially challenging times for a while and said that sometimes its tough times would show during their partnership.

“We extend millions of dollars of credit to thousands of resellers in the channel and we need to calculate the risks we can and can’t afford to take,” Estill said. “We would supply (OTG) with what they could afford to buy and pay for but in some cases, they couldn’t afford to buy the product. You have to be able to pay for what you can afford,” he added.

In this industry, if a company is not being well-funded or profitable, it never hurts to seek out the help of an organization that will act like its big brother, Estill said about FTS Group acquiring OTG.

“I suspect our relationship with OTG will strengthen if the acquirer is solvent and can run the business profitably,” Estill said. “I hope the business is able to become more substantial and viable to help it survive and thrive.”

As OTG’s new CEO, Rasmussen, who is also based in Tampa, said his main priority right now is to help OTG get its feet back on the ground by building the confidence of OTG employees, which were also acquired by FTS Group during the sale. From a short-term perspective, he said he will make frequent visits up to Canada to ensure the company maintains its existing relationships with current vendors and distributors. A long-term goal he adds, will be seeing where the biggest opportunities lie within Canada and the U.S. once its team and relationships have been re-established and built.

“Relationship building and spending time with the vendors is critical,” Rasmussen said. “We want to keep the same vendors in place but we’ve also already had some discussions about having other relations in the U.S. too. In Canada though, we see a huge opportunity in the healthcare market and we’ll also be looking at other projects which we hope will increase our overall gross profits. I’m very excited to see the company grow.”

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Maxine Cheung
Maxine Cheung
Staff Writer, Computer Dealer News

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