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5Linx revs up growth with deal

Rochester Business Journal
May 17, 2013

Rochester's fastest-growing private company grew even more this week.
 
5Linx Enterprises Inc. of Henrietta, a telecommunications services distributor, has furthered its push into the energy services market by acquiring electricity supplier American Power Partners LLC of Buffalo.
 
Craig Jerabeck, president and CEO of 5Linx, declined to give a purchase price for the acquisition. The deal will add significantly to a stretch of impressive revenue growth for 5Linx, he said.
 
5Linx ranked No. 1 on the 2012 Rochester Top 100 list of the region's fastest-growing private companies. The company also has been ranked on Inc. magazine's list of the 5,000 fastest-growing companies in the nation for seven consecutive years.
 
In 2012, 5Linx had revenue of $104 million, up from $83 million in 2011. This year, Jerabeck said, the company anticipates revenue of $135 million, with $114 million of that being organic growth.
 
A multilevel marketing company, 5Linx distributes long-distance phone services, cellular phones and accessories through a network of more than 83,000 independent sales representatives. The company's product portfolio includes several brand names, including wireless products from Verizon Wireless Inc., T-Mobile USA Inc. and Sprint Nextel Corp.
 
Jerabeck runs 5Linx with co-founders Jeb Tyler, executive vice president of marketing, and Jason Guck, executive vice president of sales. The company was founded in 2001 and has 275 employees.
 
New products have been one the keys to 5Linx's continued growth, Jerabeck said. The company's product line has blossomed over the past few years to include items such text alert services, data backup and a Bluetooth-enabled audio device.
 
One of the biggest additions to 5Linx's product line has been energy services. The company began selling electricity and gas as a sales agent for other companies in January 2011.
 
"The plan was to try it and see how we do," said Jerabeck. "If it went well, we would look into building out our own infrastructure or buying an existing company."
 
Enter American Power Partners, which is one of the companies 5Linx has been working with since 2011. American Power Partners promises its customers energy services at an affordable rate. The company has benefited from deregulation of the energy industry, which allows residential and commercial customers to choose suppliers other than their local utility company.
 
Robert Kreppel, president of American Power Partners, said the company has built a strong presence in Pennsylvania and Maryland and has plans to expand into parts of Ohio and Illinois. He would not give revenue figures but said American Power Partners' growth has been "explosive."
 
With the acquisition, American Power Partners will become a wholly owned subsidiary of 5Linx. The company's management team will remain intact, adding nearly a dozen employees to 5Linx.
 
"Our company has a very strong management team that has the expertise to provide attractively priced electricity to a number of customers in different markets," Kreppel said. "What's exciting about this opportunity is that with the customer base and marketing expertise that 5Linx has, we're going to be able to provide those customers a very attractive value proposition."
 
5Linx applied a similar line of thinking in 2006 when the company was doing well as a sales agent for voice over Internet protocol services. Given that success, 5Linx decided to build out the infrastructure for its own VOIP services subsidiary, Globalinx Enterprises LLC.
 
In 2010, Globalinx acquired California-based TMC Communications to help fuel growth. Jerabeck said revenues at Globalinx have been steady as the VOIP business is a little more reliant on the economic climate and businesses' ability to invest in IT.
 
The rest of 5Linx's business appears to be recession-proof. The company's Text-Alertz Mobile Marketing product, which it launched last year, allows business customers to market to their clients through mobile phones. Jerabeck said TextAlertz is doing approximately $600,000 a month in sales.
 
5Linx is also in the soft launch stages of two new products. The first is EC Stay Well, a health and wellness offering that provides a company's employees with 24/7 nurse and doctor consultation and access to a discount prescription plan. Jerabeck anticipates EC Stay Well will have 10,000 customers by the end of the year.
 
The other 5Linx product in soft launch is the company's own mobile service. 5Linx will offer its own mobile plan with Sprint, and eventually T-Mobile, as an underlining provider. Jerabeck said 5Linx will handle all billing and services for the plan, which will cost customers $59.99 for voice, data and text services.
 
5Linx's new line of products has served as a great way to gain new sales representatives, Jerabeck said. The company does not advertise for sales representatives. It builds its independent sales force via word of mouth.
 
"We are in two sectors with our residential and commercial business," Jerabeck said. "Our representatives can sell both."
 
"Folks looking for a new career during the recession have looked more and more to companies like ours where they can get in for a low cost and still get that entrepreneurial feel. A person who might have bought a franchise years ago might look at a multilevel business like ours where they can sell commercially available products with brands they know and trust, and see a tremendous amount of opportunity."

5/17/13 (c) 2013 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.
 


What You're Saying 

Auxson Toussaint at 11:33:25 PM on 5/21/2013
I am proud to say that I am part of this economic business movement shift as a partner.

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