June 28, 2010 | last updated May 29, 2012 8:23 pm

Moving Up | For Imcorp, road to success was bumpy

A company built on technology developed in the University of Connecticut engineering school is enjoying the kind of success startups dream about — strong earnings growth, national attention, expansion of staffing and facilities and the interest of potential corporate suitors.

But the road traveled by Imcorp hasn't been quick, nor has it been easy.

When Matthew Mashikian decided to start the company in 1997, he was 63-years-old and approaching retirement from UConn where he'd been an engineering professor for 14 years.

During that time he spent a decade developing a patented technology that detects defects in underground utility distribution cables. Mashikian felt the cutting edge technology had great commercial potential because it pinpoints the precise location of problem spots on cable lines, so companies can repair small sections of the line rather than replace the entire cable.

With 2.3 billion feet of underground cable in the United States beyond its design life, the customer base was potentially vast.

Selling the patent, which was owned by UConn, and heading into retirement was an option. But Mashikian's years of watching industry practices made him think twice.

"My experience was that large companies like to invent their own patents so they usually don't want to pay for other people's patents," said Mashikian, who is now 76 and has collected about 13 patents throughout his professional career. "So I thought they would take the technology I developed and put it on the shelf. I didn't want it collecting dust, so I decided to start my own company."

So far, the decision appears to have been a good one. After a bumpy ride earlier this decade, Imcorp is gaining momentum.

The company's revenues have jumped 270 percent over the past four years, surpassing $6 million in 2009. Company officials predict revenues will grow to $25 million in four years and could eventually reach $150 million.

Last year, Inc Magazine named it one of the top 25 fastest growing engineering companies in the country. Imcorp has 30 employees today and expects to grow to 50 over the next three years. The company has outgrown its space in Storrs near the UConn campus and is moving its headquarters to Manchester, where it has leased a larger facility at 50 Utopia Road.

Imcorp's recent success has been spurred by improved technology and a growing demand for its services from wind farm plants, which accounted for 60 percent of its overall business in 2009, said Bruce Broussard, the president and chief operating officer of the company. Its other major business segment, which is equivalent to wind farms, is the utility industry.

Imcorp also has industrial and government clients.

The company operates under an exclusive license from UConn on the patented technology developed by Mashikian, who, before joining the university, spent 16 years at the Detroit Edison Co. Imcorp so far has paid about $250,000 in royalties to the university.

Imcorp has gone through four generations of technology since 2001 alone. Broussard said it has gotten so advanced that they can now guarantee the reliability of cables for a period of time.

"The technology was a black and white Polaroid picture back in 2001," Broussard said. "Now it's a full length motion picture on a plasma screen."

To find potential weak spots, Imcorp places a voltage source at one end of an underground cable and then applies increasing amounts of voltage pressure.

Weak spots on the line then send off tiny electrical signals known as partial discharges.

Small things — like holes from nails, screwdrivers, or even a staple — can erode the electrical insulation on a cable, Mashikian said, and cause it to eventually break down.

The sweet spot Imcorp has found serving wind farms is a happy blend of timing and technology, company officials say.

Broussard estimates that more wind farm cable lines have been installed over the past five years, than the previous 15 to 20 years combined. Every wind site has 30 to 60 miles of underground 35,000 volt cable, Broussard said, but construction of these lines has been mistake-prone because of an inexperienced workforce.

At the same time, the federal wind farm tax credit has changed from an investment credit to a production credit, which has placed more emphasis on performance.

"All of the sudden quality became an issue and there was a vacuum for us to go out and do this work," said Broussard, who estimates a wind farm failure can cost up to $500,000 in lost production. "Our wind farm business has grown to a point where 50 percent of wind farms in the U.S. are being commissioned by us."

Imcorp's business with utilities — seemingly a natural fit — has been slower to develop, largely because they are highly regulated entities, which creates bureaucratic red tape that slows down potential deals.

However, Broussard said that business is starting to come around and accounts for more revenue so far in 2010, than the wind power segment.

The Federal Energy Regulatory Commission recently ruled that the use of Imcorp's technology could be categorized, in certain cases, as a capital expense, rather than an operating expense. That could be a potential driver for business because utilities can roll capital expenses into its rate base, rather than have it come off the bottom line, making Imcorp's service a more attractive investment.

Imcorp's recent success follows years of frustration and uncertainty.

The company struggled for much of the early part of the 2000's, after it lost a major licensing agreement with one of its original investors, Northern States Power.

In 2001, about 2.5 years into a 3-year contract, Northern States merged with Xcel Energy, and subsequently ended its business with Imcorp. That spelled trouble because Northern States did marketing and sales for Imcorp.

"While we were with Northern States, we had no contact with customers because they were in charge of business development," Mashikian said. "Once that contract ended, we were a small company on our own. We had to worry about marketing, business development and sales, but no one on our staff had much experience on the business side."

As a result, business ebbed and flowed for the next five to six years. Eventually Mashikian tapped Broussard in 2006 to run the business side of the company.

Previously, Broussard worked for Eaton Corp., where he was assigned to look into Imcorp as a potential acquisition target. He became so interested in the company that he left that job after 24 years to join Imcorp.

Broussard came in and changed the marketing strategy, which helped spur new lines of business.

The turning point came in 2007, when the company received a contract with Nipsco, a division of NiSource Inc., which is the largest natural gas distribution company and second largest electric distribution company in Indiana.

"Nipsco legitimized us in the utility market segment because they sponsored a substantial size fully capitalized project," Mashikian said.

Then the wind farm business, including a contract with Pioneer Prairie in Iowa, took off and utilities showed further signs of life.

Imcorp is considering regional satellite offices across the United States, and it already has a presence in Europe, a region it sees as a good potential growth opportunity.

As the company continues to grow, it will likely attract suitors. Selling is something Mashikian said he will consider, but not take lightly.

"I don't want to sell the business to a company that will dismantle it," Mashikian said.

Comments

Type your comment here:

ADVERTISEMENTS
Most Popular on Facebook
Copyright 2017 New England Business Media