After a quarter century of building Universal Pensions Inc., founder Arnie Johnson today announced the multi-million sale of his company to a public retirement services corporation based in New Jersey.
BISYS Group Inc. purchased UPI for about $85 million.
The sale of the company, official as of 12:01 a.m. today, was announced at 8:15 a.m. in the Brainerd High School gymnasium in front of an expected crowd of 450 employees.
Johnson, UPI founder, owner and chief executive officer, said the growth options for the merged company are "incredible." He said the biggest negative for him is not being personally part of the company. Johnson will leave UPI but remain a company consultant.
Universal Pensions Inc. founder Arnie Johnson walked into the Brainerd High School gymnasium this morning to announce to employees in attendance that he sold the company to the BISYS Group Inc. effective 12:01 a.m. today. (Dispatch Photos by Clint Wood)
He said after founding the company and seeing it through 26 years that staying on for any changes would be too difficult. In remarks that at times were charged with emotion, Johnson said he made the decision to sell UPI in order to help the company grow.
"At that time I made the toughest decision in my life," Johnson said, his voice breaking. "To find the right company for UPI to merge with. ... I had to find a company that would not only be good for clients but good for employees and good for the Brainerd lakes area that I love so much."
Johnson said he would not have made the decision if not for the firm belief that BISYS will be in the Brainerd area for the long term.
Chris Guarino, president of BISYS Retirement Services division, one of the company's three main operating divisions, said the company's future growth will be located in Brainerd.
With redundancies in UPI and BISYS' Ambler, Penn., operation there will be a one-time loss of positions. Guarino said less than 5 percent of employees at Ambler and UPI will be affected. And those in redundant positions will be offered a first-alternative within the company.
"We are excited about this opportunity," Guarino said. "We wanted another platform site where we could continue to grow. Brainerd brings that."
UPI's name will change at the end of 2001 to BISYS Retirement Services. The Brainerd operation will work with the Ambler, Penn., BISYS operation in the Retirement Services division. The BISYS Group has its headquarters in Little Falls, N.J.
A transition team, with representatives from UPI and BISYS, will begin looking at transition issues next week. Employees were told the effect of the merger will be minimal.
UPI currently supports about 4,000 401k plans with administration and recordkeeping services. The company also offers training and consulting services related to the industry.
With the UPI acquisition, BISYS will provide recordkeeping services to about 15,000 small to mid-size 401k plans with about 1.3 million participants. The UPI acquisition is expected to dramatically expand BISYS' retirement plan services.
Johnson said he made the decision to go public about a year ago, but needed to raise money to do that. The water was tested to see if there were companies interested in buying a minority interest. But Johnson said those companies would not pay the value for shares he wanted. He said another option was to do nothing and forget about the investment in technology and other options ahead of the company.
"I'm a smart enough businessman to know you either go up in business or down," Johnson said.
Doing nothing was unacceptable. Other considerations included borrowing money to finance growth, but Johnson said he rejected that option because of the debt and costs. Instead UPI hired a professional firm to contact companies about investment interests. All of them wanted a controlling interest in UPI to invest.
Johnson said 34 companies from across the globe were interested. Studying the options dropped the number to 12 and then to six. Finally two were left and BISYS was chosen.
UPI was founded in 1975. While serving as a national company, Johnson has routinely expressed his desire to have the company in the Brainerd area. UPI supports an annual payroll of more than $17 million.
UPI, a privately held company, has self-funded its growth with annual growth rates averaging 20 percent, the company reported.
BISYS traces its origins to 1966 Cincinnati. BISYS was created as an independent privately held company in 1989 and went public in 1992. The following year the company entered the 401k recordkeeping business. Now BISYS reports revenues of $571 million and net income of $70 million.
UPI will be primarily housed in the BISYS Investment Services Group.
Johnson said bonuses will be paid to employees who were with the company as of Dec. 31, 2000. Bonuses will be based on years of service and will mean distribution of an excess of $1 million.
UPI employees made their way to the school through a light morning drizzle. Inside workers were still cleaning up the remnants of Grad Blast. UPI staff filled the high school gym bleachers and waited for an announcement from a single podium on the gym floor.
After the meeting, Anna Bible, UPI pension specialist, said she had no idea what the announcement was going to be. Bible joined the company in April.
"I think (the merger) is great," Bible said. "Things will probably get better."
Most employees did not comment as they exited the school gymnasium. After parting remarks, Johnson received one of three standing ovations that continued after he returned to his seat.
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