WADE DANIELS Staff Reporter Founded less than a year ago, Calabasas-based Camino Software Systems Inc. has yet to put its first product a data storage system on the market. But that hasn’t stopped the young company from planning its first corporate takeover. “You can grow your company and its list of customers faster through acquiring another firm than doing it from within,” said Glenn Adams, a co-founder of the company, which is close to finalizing a deal to acquire a 9-year-old competitor with a similar product. “We’re trying to get the stature to make a footprint in the business.” Adams is hardly alone. While the nation’s headlines are full of stories of billion-dollar corporations gobbling up one another, merger mania is rippling through the small-business world, as well. “There are a lot of smaller transactions going on these days, where companies get ahead by merging,” said Gordon Gregory, managing director of the Sherman Oaks-based Mosaic Capital LLC. “These are unreported transactions that never make the news.” As a growing number of companies thrive in the current economy, more business owners are looking to purchase their competitors, suppliers or distributors, Gregory said. At the same time, firms that are not enjoying the economic rebound are finding this to be a perfect time to sell. “Smaller businesses generally follow what the bigger businesses are doing,” said Jim Jacobs, a program manager for the Valley Economic Development Center. “They’ve been watching the big guys grow by buying each other and they start to wonder, ‘How can we do that?’ ” For a small and largely unknown company such as Camino, the benefits of an acquisition go far beyond those of instant size, said Adams. “By acquiring the right company, we can instantly go from being a 1-year-old company to being a 9-year-old company,” Adams said. “Buying a company with a history of survival through good and bad means we can go to a bank (for a loan) with something to show.” Because bank loans can be difficult for small and medium-sized companies to obtain, most small-business mergers involve unusual financing arrangements, said Dana Arnold, chief executive and chairman of Westlake Village-based Pacifica Ventures LLC, a venture capital firm. About 80 percent of deals in which both buyer and seller are worth less than $5 million involve what is known as “seller financing” in which a seller, rather than requiring a single large payment, agrees to receive a number of smaller payments over time. That’s how Van Nuys-based PathNet Esoteric Laboratory Institute structured its purchase of a competitor a deal the company completed only 10 months after it was founded. The 2-year-old firm, which conducts specimen tests for diagnosing cancer for medical facilities, now is in the process of acquiring another three similar firms on terms worked out with the sellers. “I pay for the acquisitions over a period of years based on ongoing sales,” said Alan Kaye, PathNet’s president and chief executive. “I have to carefully show the owner of the company we’re acquiring that sharing the risk can mean a tremendous upside.” Acquiring a competitor can be a good way to jump-start a company’s growth, said Kaye. PathNet’s acquisitions, he said, are responsible for the firm’s expansion to 55 employees and $2.3 million in sales in 1997. “Now our balance sheet is solid and we are having some success with getting loan money,” he said. That, in turn, could spark even more deal-making in the future. “The venture capital people are knocking on our door,” Kaye said.