Strength in Numbers

A profile of the 1995 Emerging Entrepreneur of the Year and the runners-up.

By Jay Finegan | 
 

Consolidation may be the growth strategy of the moment. Paul Verrochi is building an empire by knitting together a highly localized mom-and-pop industry, and he's creating a national juggernaut in the process

EMERGING ENTREPRENEUR
Emerging Entrepreneur: An individual whose company is founded on solid infrastructures that promise continued rapid growth

* * *

THE WINNER
Paul Verrochi
Company: American Medical

Response, Boston

Founded: 1992

1994 Revenues: $327 million

1994 Profits: $27 million

Number of employees: 6,210

Business: Nationwide ambulance service

* * *

THE RUNNERS-UP
Robert J. Laikin

Company: Brightpoint Inc., Indianapolis

Founded: 1989

1994 Revenues: $169 million

1994 Profits: $4.6 million

Number of employees: 75

Business: Distributor of cellular-phone equipment

* * *

Eric C. Cooper

Company: FORE Systems Inc., Warrendale, Pa.

Founded: 1990

1994 Revenues: $48 million

1994 Profits: $7.3 million

Number of employees: 284

Business: Manufacturer of high-speed computer networking products

* * *

For a guy who knew nothing about ambulances four years ago, Paul Verrochi has come a long way. Since launching American Medical Response (AMR), in August 1992, he has built the country's largest ambulance company, now with $550 million in annualized revenues, some 10,000 employees, and operations in 26 states. And fueled by a $100-million credit line and $90 million from a stock offering last spring, expansion is going full tilt.

One of the most striking parts of Verrochi's story is that he has built a big, successful business not once but three times. Each business has been a consolidation play, and Verrochi's basic approach -- a "Pac Man strategy," one analyst calls it -- hasn't changed much. He enters a fragmented industry, acquires the best companies available, and knits them together to gain operating synergies and economies of scale. Over 24 years he and his longtime partner, accountant Dominic Puopolo, have engineered more than 150 deals.

Verrochi's entrepreneurial bug bit him early. In 1971, fresh out of the Merchant Marine Academy, he started a building-maintenance business. "My mother was appalled," he recalls. "Here I was -- a college graduate -- scrubbing toilets." He grew that company to revenues of $18 million, with 10,000 employees in six states, and then sold out to a British company. During a three-year earn-out, sales soared to $120 million as Verrochi scarfed up cleaning services from New England to Atlanta.

Act 2 was an asbestos-removal outfit called American Environmental Group. Starting with three merged companies and $8 million in sales, Verrochi took the business to $35 million in three years. He stayed on for two years after he sold it to Allwaste, a big public company, buying 15 more companies and building revenues to $106 million.

At 46 Verrochi is into his third and possibly final entrepreneurial act, with AMR, based in Boston. "I've already made enough money," he says. Not that he's complacent. As chairman, CEO, and development honcho, he's on the road several days a week, focused on dominating an industry projected to hit $10 billion by the year 2000.

The ambulance business wasn't even on Verrochi's radar screen in the fall of 1991, when he and Puopolo leased office space in Boston and cast about for a new consolidation candidate. When their banker suggested ambulances, Verrochi was intrigued. "I discovered there were 2,200 private companies in the field, mostly mom-and-pop operations," he says. "Some had consolidated regionally, but nobody had gone public, and venture capitalists were nowhere in sight, so it hadn't been picked over. It was undiscovered, which made it perfect for us."

With help from the industry's top consultant, Verrochi pulled together four top-notch ambulance operators -- two in California and one each in Delaware and Connecticut, with combined revenues of $96 million -- and melded them into AMR in August 1992. He and Puopolo spent $2 million to lay the legal and accounting groundwork and then financed the deal as an initial public offering on the New York Stock Exchange, raising $23.7 million. "That was the first time it had ever been done on that exchange, a consolidation like this, so it was classic," Verrochi says.

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