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January 13, 2014

Experienced entrepreneur looks to take Farm'ton's OneSource to the top

Photo | Matt Pilon A.J. Wasserstein is steering Farmington bottleless water cooler service provider OneSource Water through an acquisition spree that's landed the company in 16 states and counting.

A.J. Wasserstein is an entrepreneur who's made a lucrative career as a dealmaker.

As founder and CEO of data information storage firm ArchivesOne, Wasserstein orchestrated nearly 40 acquisitions in 17 years, building the small Watertown firm into an industry leader before selling the company in 2007 to Iron Mountain for $200 million.

Now Wasserstein, 47, is looking to repeat that success in a new industry.

Since September, he's been president and CEO of OneSource Water in Farmington, which, after 10 acquisitions in two years, has quickly become a national player in the bottleless water cooler service industry.

And, with backing from some financial heavyweights, OneSource's buying spree isn't likely to stop anytime soon. In November, the company purchased a major Arizona distributor of bottleless water purification systems. Another deal could be announced this month.

The goal now, as it was with ArchivesOne, is to build OneSource into an industry powerhouse, Wasserstein said.

“The industry is fragmented, so there does not appear yet to be a dominant player,” said Wasserstein, who has been OneSource's chairman since 2010. “We'd like to think we might be one of the candidates that emerge.”

It seems like a big expansion that's happening fast, and it is. OneSource's 2013 acquisitions spanned from North Carolina to Las Vegas.

The company is now working as quickly as possible to improve its back-end systems and processes to better and more uniformly manage customer relations and billing at its 23 locations in 16 states, which are plotted on a map in Wasserstein's office.

But Wasserstein said the way he and his executive team select and integrate acquisitions is anything but slapdash. They look for the right opportunity at the right price, wherever it may be.

“I would never paint us as cowboys,” said Wasserstein, who is also pushing organic growth in the company's existing markets. “We are comfortable and fluent with prudent, very organized and operationally intensive acquisition growth.”

The bottleless trend

OneSource is a distribution and service company that provides several different brands of bottleless water coolers to offices and other businesses.

Unlike bottled coolers, which use five-gallon jugs of spring water, bottleless coolers connect directly to a building's water line, chilling filtered tap water through reverse osmosis or other methods.

The company doesn't manufacture coolers, but rather installs and maintains them at workplaces through service agreements.

Its operations mainly consist of dispatch, field service, customer service and sales.

So, when OneSource does an acquisition, it's buying a new pool of customers and any back-end systems or processes its executives might find enticing.

After making an acquisition, OneSource keeps the local sales and service teams, and consolidates financial and dispatch operations to Farmington to achieve scale and other efficiencies.

Bottleless coolers remain less common than bottled water coolers, but they are gaining in popularity: the number of installed bottleless units is up 8 percent over a year ago, according to research firm Zenith International.

Currently, there's one bottleless cooler for every four bottled coolers in the U.S.; that's up from just one in 10 in 2007, Zenith data shows. The bottleless cooler's competitive differentiation is its typically lower cost, endless supply of water, and smaller size.

Targeted for growth

OneSource was founded in Indianapolis in 2005 as P.O.U. partners.

Wasserstein and a group of private investors — some of them from his ArchivesOne days — discovered the firm in 2009 as a possible investment opportunity and infused the company with capital. A new management team and growth strategy soon followed.

The group eventually moved the company to Connecticut, where Wasserstein and his Chief Operating Officer John Pavlovich — a former ArchivesOne executive and BlumShapiro partner — live. They changed the company's name in 2011 and Wasserstein became CEO and president in September.

OneSource has 60 salespeople across its 22 offices and hopes to add 15 people in 2014. There are 20 employees in Farmington, including the executive, dispatch and customer service teams. OneSource is preparing to double its 3,000 square feet of office space on Two Mile Road.

Wasserstein wouldn't disclose revenue numbers, but he said the company has averaged 110 percent growth each year since 2010.

Ironically, the company has no Connecticut customers, but Wasserstein wants to change that. His preference is to buy an existing Connecticut operator.

Long-term lending relationships

To fund its buying spree OneSource has raised approximately $60 million in debt and equity financing, much of it from lenders — Waterbury's Webster Bank and HV Capital Investors in Michigan — Wasserstein said he did business with during his time running ArchivesOne.

Glenn Healey, HVCI's managing director, said OneSource has built up good market share in several states, like Texas, and he thinks the company's expansion will lead to further gains.

He said he sees similarities between OneSource and ArchivesOne.

“I think this is a similar opportunity in a sense that it's a pretty straight forward business and it has to do with implementation, delivering,” Healey said.

Healey said HVCI's investment had a lot to do with its confidence in Wassertein.

“The fact that he was going to get involved and be involved in the management of the company, especially now as CEO, that's a big plus for us,” Healey said. “He's a great CEO, no question.”

As Wasserstein looks to the future, OneSource's next goal is to increase its installed coolers from about 35,000 today to 100,000, which could take three or more years.

It will take a combination of acquisitions and organic growth to get there, he said.

“That's a definitive goal, but it's also not so grandiose that it loses meaning,” Wasserstein said.

He admits it won't be easy. There will be more money to raise, customers to win over and operations to optimize.

“It's not a layup. It's hard work,” Wasserstein said. “But it's not impossible. I've done it before.”

Read more

OneSource picks up Fla. water operation

OneSource acquires Ohio distributor

OneSource raises $10M

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