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Kasalis: Sharp Focus on Protecting Value

September 2015

In September of 2014, we introduced you to a company called Kasalis, based in Burlington, MA. A truly niche manufacturing business, Kasalis uses “Active Alignment” to manufacture capital equipment for optical systems. Active Alignment is an advanced manufacturing technology that enables much higher performance for optical products, providing the sharpest images possible, when compared to the use of traditional assembly techniques, explains co-founder and CEO Justin Roe. You’ll find its technology in the micro cameras in mobile phones, sports cameras, automotive, medical devices, and drones; in the gesture-recognition systems in next-generation computers, mobile phones and TVs; and in wearable technology, such as glasses.

Founded in 2011, the company worked on perfecting its technology and product development before landing its first client, 18 months later. From there, it was all systems go. Kasalis built $8 million in revenue in 2013, and grew that number by 100 percent the following year. Its products are now distributed throughout Asia, Europe, and North America.

Rewarded by a “keeping customers first” value proposition

While proprietary technology helps Kasalis define its competitive difference in the market, Roe notes that value for customers has been the key driver of its success. As he stated in the original piece, “we want our customers to make better products and further increase their profits by [working] with Kasalis… Everything we do, every technology we develop, and every product we design is created with that value proposition in mind. We want our customers to love us, and come back to us because we deliver on our value promise every time.”

Of course, creating value for customers offers a wide range of rewards, the most important of which, notes Roe, is trust. “Trust is critically important with our customers. You’re dealing with a number of very complex projects where you can’t describe every single step at the start. Our customers are always in a position that they need to trust our technology and our people; they’ve had to trust that we’ll do our best to help them succeed. And we haven’t let anyone down yet.” For Kasalis, that trust has translated into loyalty, brand advocacy, and business-building referrals.

How does a truly satisfied customer tell you that you’re providing value? For Kasalis, it came in the form of an acquisition. In May 2015, after less than five years in business, the manufacturer was acquired by publicly-traded electronic products firm Jabil Circuit Inc. (NYSE: JBL), headquartered in Florida. While terms of the acquisition were not disclosed, Jabil in June announced third-quarter revenue was $4.4 billion, up 15 percent from the same period in 2014. Its net income for the quarter was $197 million, down from $267.9 million from the same period in 2014. That’s a truly powerful partner.

Perhaps the most telling part of the sale was its surprise nature. “We had not been looking to sell,” Roe asserts. “Jabil was a customer with whom we had a great relationship. The acquisition made strategic sense for them and offered us an opportunity to invest heavily in building our technology here in Massachusetts. The valuation they put on the firm reflected its strategic importance and the technologies we had developed in a very short time. It is a great opportunity for the company and the employees.”

To the latter point, the Kasalis office in Burlington will remain open and be expanded as part of the acquisition, growing headcount from 27 to about 40 within the next few months, according to Irvin Stein, senior global business units director of Jabil Optics, the division of Jabil that Kasalis will now fall under.

Help along the way

While Kasalis had a fast ramp-up and experienced rapid growth, Roe acknowledges that a “trusted relationship” with a bank was a must in their plans. “As in everything we do, I was looking for a partner I could trust,” he says. “And I wanted a relationship with a person, not just an institution. When my accountant introduced me to [Salem Five senior vice president] Gordon Massey, I knew I’d found the right financial partner. Having a good line of credit in place helped a lot, but Gordon worked hard to understand our business and act almost as an external CFO, helping to identify the risks and opportunities in our deals. He earned my trust, and I don’t think we would have had the quick success we achieved without Salem Five and Gordon.”