Marco Purchased By Equity Investment Firm

NEP is one of the region’s largest and oldest investment firms.

St. Cloud-based Marco Inc., an IT and business services firm, announced late last week that investment firm Norwest Equity Partners had acquired it. Terms of the deal were not disclosed.
Marco said the transaction helps it reach the “next phase of growth.” The employee-owned company has had to increase its payouts to retiring workers, which in the long run will put a strain on growth, CEO Jeff Gau told the St. Cloud Times.
“If you’re using your money to buy back stock from employees that are leaving and not using that money to buy companies and driving your (return on investment) and your acquisitions, that model’s going to start to change,” he said. “To be good stewards of our employee-owned company, I think the timing factor … would be to get on that now.”
The company’s growth has skyrocketed since Gau became CEO in 2005. Annual revenue growth has averaged 36 percent. In 2014, revenue was approximately $180 million.
Few changes at Marco are expected. All 920 employees in its 42 locations will keep their jobs, the leadership team remains the same and the headquarters will remain in St. Cloud. The company will follow through on its 30,000-square-foot expansion at its headquarters next year. Perhaps the most-notable change for the company will be the transfer of employees’ shares to a 401k plan with matching contributions.
“We will continue our ongoing commitment to being a good corporate citizen within the communities we serve,” Gau said in a statement.
Earlier this year, Gau was named an EY Entrepreneur of the Year award winner for the company's stunning growth while maintaining a friendly culture.
NEP, a Minneapolis-based firm founded in 1961, says it invests in “growing, profitable and scalable middle market companies.” Marco’s strong growth, driven by how it treats both its customers and employees, was what made it so attractive to NEP, managing general partner Tim DeVries said.
“We’re excited to partner with [Marco] to help them continue growing and building into an even stronger company,” he said in a statement. “Marco’s leadership, culture and customer-centric approach were key investment drivers for us. We also appreciate our shared Minnesota roots and long history in our respective businesses.”