382 Communications talks about Iserv acquisition


382 Communications is based in Quincy, Mass. Image via fb.com

Why would 382 Communications — a Massachusetts based wholesale voice, data and network service provider — become the parent company of Iserv, a Grand Rapids-based Internet service provider?

Richard Koch, director of 382 and now chairman of Iserv, sought to answer that question in his recent presentation to the Association for Corporate Growth.

Koch’s story, told through his thick Boston accent, began in July when 382 purchased Iserv after months of due diligence. He said he saw in Iserv a company that was viable, working and was somewhat in neutral as, conveniently, it was looking for a buyer.

Now backed by 382, Iserv can see higher margins and provide Wi-Fi, business-class voice, co-location disaster recovery and national coverage.

“382 is mainly wholesale for telecommunications. Iserv has thousands of customers, and, to us, it was like, ‘Okay, we can sell them lots of things now,’” Koch said. “We applied the wholesale costs to the retail that Iserv offered, and what we did by doing that was we greatly increased our margins, and we greatly increased services and expanded our products.”

Although 382 has no current plans to expand, Koch said, it is on the hunt. When it does expand, he said, it would make sense to continue the model of buying companies like Iserv in smaller cities.

West Michigan’s telecommunication industry has few competitors other than national brands like Verizon and Comcast, he said, making it easy for Iserv to expand in the market. It is already seeing profit and growth, he said.

His biggest and most pleasant surprise in acquiring Iserv was that there really were no surprises.

“Being in the telecommunications business, it made sense to come in as a wholesale player, look at a retail operation, put these things together, and now we can offer a flat-rate plan to people and all these other services,” he said. “We’re hiring technical and sales people, and if anyone knows someone who’s looking for a good, growing company, take my card.”

There was, however, one thing Koch hadn’t counted on: the value add of the intangibles.

Koch kept the Iserv staff, which he said didn’t know whether to send in resumes or bake cupcakes. They probably did both, he said, adding that 382 “didn’t so much acquire a company as we did adopt a family.”

The West Michigan culture is a great environment for business, he said, gushing about the perks of a culture marked by Midwestern friendliness where expenses are cheaper and customers, employees and partners are loyal.

One 90-year-old customer, who had to cancel services after a stroke, called just to say goodbye to the staff, he said. To Koch, that customer summarized why working in West Michigan was worth the risk.

“If I could export all the culture here to the East Coast, we’d have a much better country," Koch said. "In the East Coast, it’s bottom line and numbers. . . . Here, I think it’s the work ethic and the loyalty.

"Everyone at Iserv is from West Michigan," he said. "I don’t happen to be, but I may be soon. It’s a nice place here.

"We’re quite proud of our acquisition, and we’re trying to join the community — even though we talk funny,” Koch added with a chuckle.

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