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Partial management buyout at Mandarin

Smart Libraries Newsletter [October 2007]

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Although the larger companies tend to monopolize the headlines, there continues to be a number of smaller companies that also participate in the library automation industry. These smaller companies often are more specialized, offering lower cost products to smaller-sized libraries. Broadly speaking, these companies sustain high levels of satisfaction in their client libraries.

Mandarin Library Automation, standing in the ranks of these smaller companies, recently took a step forward in the company’s business evolution. In a transaction completed on July 1, 2007, management gained ownership of fifty percent of the company. Three of the company’s executives, including Leo Lazo, President, Christine DiVito, Comptroller, and Art Graham, Vice President of Technical Services, acquired half of the company’s stock. In this move, the executives responsible for managing the company gain a substantial stake in its ownership as well.

Although this shift represents only an incremental step in the evolution of Mandarin Library Automation, it presents Smart Libraries Newsletter with the opportunity to spotlight one of the smaller companies in the industry. Mandarin Library Automation caters mostly to the K-12 school library market, though small academic and special libraries use its products as well. Mandarin Library Automation indicates that its products are used in libraries in 50 countries worldwide, but most of its clients are in Canada and the U.S. The company’s flagship product, Mandarin Oasis, was introduced in 2005, as a fully Web-based automation system. Mandarin Oasis fits well within the trend in the K-12 school library arena of moving away from PC-based systems installed in each library toward centrally managed district-wide Webbased systems.

M3, the company’s primary product since 1999, continues to be widely implemented. Shortly after the launch of Oasis, the company began offering the M3 automation system as a free download. Any library can install and use the basic M3 product without charge and without support, but can optionally purchase add-on modules and support. The free Mandarin M3 download includes a 32-Bit client/server architecture, an online public access catalog, circulation and cataloging modules, configuration and group editors, and a data import/export utility.

Prior to this latest transition, Mandarin Library Automation was wholly owned by EGEG Holdings, which in turn is owned by Elliot Goldstein and Eleanor Goldstein of Boca Raton, Florida. At its peak, the EGEG Holdings portfolio included SIRS Publishing, SCP Commercial Printing, and Mandarin Library Automation. Elliot and Eleanor Goldstein started an educational publishing company operating under the name Social Issues Resources Series, Inc. The company’s core products included SIRS Researcher, SIRS Government Reporter, and SIRS Discoverer, subscription products originally delivered on CD-ROM and later through the Web. SIRS products primarily targeted K-12 Schools.

SIRS involvement in the library automation arena began in 1994 when the company entered into a joint marketing agreement with Melchior Management Systems, a company based in Montréal, Canada, that created the Mandarin Library Automation system.

Melchior was founded to develop library software. In 1986, the company introduced the Mandarin library automation system, one of the early PC-based systems that included integrated cataloging and circulation modules and that used MARC records. Mandarin was a DOS-based system that gained a strong reputation among the early PC-based systems.

After about a year of joint marketing, EGEG Holdings, through SIRS, acquired the Mandarin software from Melchior Management Systems on July 1, 1995. Harry Chan, formerly President of Melchior, came on board as a Vice President for SIRS and continued oversight of the Mandarin software through a new division named SIRS Canada. The acquisition of Melchior by SIRS was positioned at the time as a natural transition for the company, given the success of the joint marketing agreement. This move greatly expanded the opportunities to market Mandarin in the U.S through SIRS’ existing marketing infrastructure.

As interest in DOS-based systems waned, the company began development of a next-generation system, called M3, launched in 1999.

Following the acquisition of Mandarin by SIRS, the company operated as a merged business, operating under the name SIRS Mandarin. Once acquired, the library automation division reported to Leo Lazo, the Senior Vice President for SIRS. At this point, much of the development of the Mandarin software was transferred to Boca Raton, Florida.

In August 2001 EGEG reorganized its businesses, separating the publishing and library automation operations, forming two business units called Sirs Publishing Inc. and Mandarin Library Automation, with Leo Lazo as President. While the two businesses continued to share some administrative and support resources, they began operating independently. This move paved the way for upcoming divergent business developments.

In November 2001 the company closed the offices in Montreal, the headquarters of Melchior prior to its acquisition. At this point Harry Chan exited the company and Leo Lazo stepped in as President of the newly-formed Mandarin Library Automation while continuing his role as Senior VP at SIRS.

Chan continues to be involved in the library automation arena as owner of Media Flex, Inc., which offers a number of products (furniture, supplies, labels, security strips, etc.) and services for libraries, including hosting and support for the open source OPALS-NA library automation system for schools, small businesses, and churches.

In a transaction that closed on July 21, 2003, EGEG sold SIRS Publishing, Inc. to ProQuest Information and Learning. The SIRS databases were a natural complement to the other information products offered by ProQuest and strengthened their presence in the K-12 school arena.

Following the sale of SIRS to ProQuest, Mandarin Library Automation continued under the ownership of EGEG Holdings. This latest move to sell half of its interest in Mandarin Library Automation to this management group represents another step in the scaling down in its investments. Yet, the influence of EGEG Holdings remains strong since it still owns half of the company. Elliot Goldstein will continue to serve as the Chairman of the Board of Directors of Mandarin Library Automation, Inc. In the current business cycle in the library automation industry we see increasing investments by private equity and consolidations through mergers and acquisition. This management buyout bucks that trend. A transition toward ownership by the executives who run the company seems to be a move that will allow Mandarin Library Automation to continue to prosper in its niche of the industry rather than become the latest victim on the mergers and acquisitions front.

View Citation
Publication Year:2007
Type of Material:Article
Language English
Published in: Smart Libraries Newsletter
Publication Info:Volume 27 Number 10
Issue:October 2007
Publisher:ALA TechSource
Place of Publication:Chicago, IL
Record Number:13140
Last Update:2022-11-27 15:45:57
Date Created:2008-03-25 19:53:52