CFO Studio magazine with Todd McElhatton

FEATURED CFO 20 cfostudio.com a lot more successful here with a company that has a presence in the U.S.” His job, then, was to find a way to negotiate the financing. “Originally we were talking about a stock-for-stock transaction, almost like a merger,” he says. “But it was important to all of us that in the end the new entity would be a U.S.-based global company. We realized that the best way to do this would be a true acquisition with a mix of cash and stock.” He needed to find an investor to help finance the transaction and he found a third teammember in Boston-based private equity firmAbry Partners. Abry was familiar with the industry and recognized the need for a global, vertically integrated IoT telematics company with an end-to-end software and solutions offering. So was it all smooth sailing? No. There were ups and downs, Mavrommatis concedes. “Our private equity partner had to conduct due diligence on both companies. We had to conduct due diligence on Pointer and Pointer had to conduct due diligence on us as their shareholders were taking 50 percent of the consideration in stock,” he says. In addition, I.D. Systems and Pointer being public companies, fixing the amount of the deal, with fluctuating stock prices, wasn’t a matter of simple math. Mavrommatis, who has an MBA from New York University’s Leonard Stern School of Business and is a CPA, has completed numerous deals since he started his career. In 1999, he worked for regional public accounting firm EisnerAmper, helping companies go public. Back then, it was easy to go public even without revenue, he says. While still at EisnerAmper, he actually helped I.D. Systems go public in that year. They didn’t have a CFO at the time, he says, and offered Mavrommatis the position. “I was intrigued by the technology, I liked the people, and started in the job when I.D. Systems was sort of pre-revenue.” Revenue was only $923,000 in its first full year as a public company. Compare that to $150 million, the combined company size after the Pointer acquisition closes. Mavrommatis has done several other tuck- in acquisitions at I.D. Systems, raising about $70 million through equity offerings in order to finance them. He was also quite involved in structuring a deal with Avis Budget Group to buy I.D. Systems’ technology and install it in—by year end—125,000 cars. Not only that, Avis made an investment in the vendor, of approximately 1 million shares of I.D. Systems stock. Mavrommatis looks around him at the company he’s been highly instrumental in building and says of this latest chapter in its history, “I think it’s a success, but it’s not over yet. There’s a lot of work to do and more room for opportunity for growth.” Sometime this Fall, PowerFleet will launch with offices in the U.S., Germany, the U.K., Israel, Brazil, Argentina, Mexico, and South Africa. It will have 800 employees. “People want to see their organization be successful,” says Mavrommatis. “Once the organization is a success, they’re able to see that everything they do on a day-to-day basis is making a difference.” Connected Cars Rental cars that monitor their own gasoline levels and automatically calculate the amount a customer should be reimbursed if the car is returned with extra fuel would be a boon for the rental company as well as the traveler. It is Avis Budget Group’s plan to have its entire fleet worldwide able to communicate that level of detail to the firm’s computers by the end of 2020. I.D. Systems provides the device that enables that dream. In 2018, I.D. Systems delivered technology for 50,000 of Avis Budget Group’s cars. In December 2018, the two companies inked a deal for 75,000 more systems to be delivered in 2019. Ned Mavrommatis, CFO for I.D. Systems, says the company’s connected car technology, completely automates the pickup and return of rental cars. In addition, he says, “It allows Avis Budget to create this concept that they call a virtual rental.” Using a smartphone app, a renter can locate the nearest car that Avis Budget has available, perhaps in a big-box store’s parking lot, unlock it, and be off on the road. The renter can bring it back to the same place or somewhere else, and the system calculates the charge. “So it allows Avis to move away from the traditional airport environment,” says Mavrommatis, “and leave cars everywhere, and create this connected car environment.” The enabling technology, an Internet of Things (IoT) device that I.D. Systems first delivered in 2011, provides rental car firms real-time visibility into their automotive assets, in order to keep them rolling and productive.