Hailing from the great state of Texas, where the folks are known for living large, Jim Sheffield wants you to know that he doesn’t have any great designs on being the biggest office technology dealership in the country. But he does have his sights set on being the best.
That doesn’t mean the president and CEO of UBEO Business Services doesn’t fancy the prospect of continuous growth. After all, the company tripled its revenue in 2018, fortified by a series of acquisitions fueled by its union with Sentinel Capital Partners.
Perhaps the most-pivotal, or at least geographically expansive, deal Sheffield hammered out saw UBEO add Ray Morgan Company (RMC), the largest independent Canon dealer in the west. That gave UBEO, which already covered 85 percent of Texas, a stronghold in Northern and Central California with 16 locations. Already in 2019, UBEO has onboarded Core Business Solutions, Copyzone, PrintRX and Braswell Office Systems, bringing its total to seven deals in the last year while pushing annual revenues north of $200 million.
Founded in 2004, UBEO formerly flew under the flag of DOCUmation (DOCUmation of Austin, DOCUmation of North Texas and DOCUmation of East Texas). The organization counts Ricoh, Canon, Konica Minolta, KYOCERA, Lexmark, HP and now Xerox as its primary vendors.
We chatted with Sheffield and COO John Barbieri to learn more about the company’s rapid growth, its relationship with Sentinel Capital Partners and the value proposition UBEO extends in a highly competitive M&A market. And while Sheffield doesn’t expect to triple in size during 2019, he has definite designs on continuing to build UBEO well beyond The Lone Star State.
How is business so far in 2019?
Sheffield: Our core business is solid. This is a business that, by its nature, is not going to explode on you, but it is performing well. The other side of our business is acquisitions, and I can say that the pipeline is really healthy.
What does UBEO Business Services pride itself on?
Sheffield: We take a lot of pride in our value proposition to our customers, which we feel is one of the best in the industry. In our organization, excellence is an important aspect. We follow a simple philosophy of doing exactly what you say you’re going to do, when you say you’re going to do it. That’s a key component to our corporate culture. We challenge our people individually to follow that motto. One of the things I ask new employees is, ‘how many people do you know who can pull that off?’ That challenge is difficult to execute, but if you strive toward that goal, you’re doing really well. Delivering on your promises makes you not only a great business person, but a great father, mother and neighbor. Those things are important to us.
Ever since merging with Ray Morgan Company last fall, UBEO has acquired Copyzone, Core Business Solutions, Braswell Office Systems and PrintRX. What is the common denominator across this swath of additions?
Sheffield: It basically comes down to great people. They’re people who want to win and win the right way. They work hard toward the common goal. That’s definitely the situation with the fantastic companies that we’ve acquired.
It’s been a year since you joined forces with Sentinel Capital Partners. Aside from the financial wherewithal they provide, what has made the union with your dealership so beneficial? What do they bring to the table?
Sheffield: Obviously, a big part of it is that capital, the institutional money that allows us to expand at a rapid rate like we’re doing now. During the vetting process, we interviewed 26 organizations, and we were pretty selective about it. We enjoy Sentinel and they enjoy our company. That was really important to us. When we did this deal, it wasn’t because we needed anything, necessarily. Our business was already outstanding; we were very profitable, and we provided excellent treatment to our customers. We’re very much a value play. But we decided that we wanted to grow this thing on a national level. However, if we didn’t find the right partner, we weren’t going to do it. It just so happens that we ran across the right partner. There’s not been one day where I second-guessed the decision to go with Sentinel.
Barbieri: The key to Sentinel was the autonomy to run the business in order to accomplish the objectives we defined for our success. During the due diligence phase, Sentinel’s laid out what they said they would do as an investment partner, and they’ve done exactly that. We adopt that same philosophy with our acquisitions.
With no lack of competition for top-performing dealers to acquire, particularly from the likes of Visual Edge Technology and the Flex Technology Group, how do you communicate a unique and superior value proposition to prospective acquisitions?
Sheffield: We’re building a brand of excellence. The people we talk to are also looking at the other options that are out there, and we’re selective as well. We built this company from nothing to where it was on April 2, 2018, when we did the Sentinel deal. We have a certain level of know-how that comes across when we communicate with prospective dealers. The people who decide they want to move forward with us are people who want to be the best. We don’t necessarily want to be the biggest company out there—we’re not doing this to round up a bunch of dealers and become a platform. We really have an ambition to be the premier performer in our industry from a customer-experience standpoint. There are certain dealers who are attracted to that, and we’ll do business with those like-minded people.
In most of the deals we have done, the consolidators mentioned have been in contention as well. I don’t specifically ask (prospects) what organizations are looking at them. We focus on delivering the message of our value proposition. With RMC, we had a conference call with their management team. I already knew a couple of those guys and they’re great people, which is important to us. The call went well, we flew over there and talked about what our vision was, and their core values were right in line with our own. We had a handshake deal at the end of that meeting, and we were late to that particular negotiation.
Given all the vast additions you’ve experienced in the past year alone, what has been the key to harmonizing the integration process? Are there any challenges in this regard?
Sheffield: The key is we talk up-front about what we want to be as an organization and the core values that we believe in. If a prospective acquisition doesn’t believe in those core values and doesn’t want to be the premier player in their market, then we’re probably not the right choice for them. It’s important that these organizations have the same values as we do. We want to share best practices, and so far, this has been a relatively quick process. We haven’t even had a formal best-practices meeting, but we’ve had kickoffs and talked about what we’re doing and how we go to market. I think a lot of the companies that have become part of our organization have taken a lot of those things that UBEO does well and incorporated them into their playbook. We’re not trying to change or fix anyone; we’re not going to buy a broken company. If everyone comes into the deal with the core values that we openly discuss up front, there’s not as many integration issues.
Barbieri: What’s important is to gain a better understanding of the present and future intent with the principle shareholders and key employees. We set those expectations for all of the parties involved, and then it’s a matter of executing on the deliverables. We want it to be a seamless process, and we’ve accomplished that with these acquisitions.
Is there a secret sauce ingredient to becoming a premier player?
Sheffield: I think there are certain things that we do that are different from most people in the industry, and we take a lot of pride in that. They’re not difficult things; some of them are expensive, but they enhance the customer experience so much that it’s worth doing. That’s the important thing to us, and that’s how we’ve been able to build the organization. In the beginning, our Texas companies did seven startups in approximately five years, which at that time was supposed to be impossible. Our goal was to become the premier player, and in relatively short order, we were the premier player in Texas as well as the biggest player. If you do what’s right for the customer, success usually follows.
We make decisions the same way since day one. It’s real simple: one, what’s best for the customer; two, what’s best for the employee; and three, what’s best for UBEO. We found that if you take care of one and two, the third one takes care of itself. And that’s how we operate.
What does the M&A pipeline look like at the moment? Could you possibly sustain such a prodigious acquisition clip? Are there geographic or product-driven markets you are currently watching?
Sheffield: Looking back at last year, we more than tripled our business. We’re not going to do that again, but we’ll have healthy growth. We will be in additional regions and we’ll make more investments in our business. We’re going to make some important hires that are going to improve our organization. And there’s this continuous move to try to enhance what we do for our customers—that’s a constant move forward. We’re currently over $200 million in revenues, and we expect to be in excess of $300 million during the next 12 months.
Barbieri: We truly are positioned for robust growth moving forward. The model we maintained is scalable, it has defined processes and deliverables. We’re able to replicate that and we just need to execute, really. We have a desire to be national and offer the best-of-breed technology across the country.
Is there a particular geographic market you’re targeting?
Sheffield: I think you will see us in the east, specifically in the northeast. We have plans there. Overall, we’re interested in any good market in the country, for sure.
Talk about the role that organic growth has played in the UBEO success story. What are some of your strengths in this regard?
Sheffield: We would like to think that we can execute well. The business has challenges with growth, but at the same time, the glass is half full because we don’t have a high degree of market share. We’re a relatively large organization in our industry, but the market share is not there. We feel fairly confident that we can gain market share, and that’s where our growth comes from. We’re real bullish. We picked up the Xerox product line that’s added a certain degree of credibility for our production line, and it’s actually increased our business in all of our lines of production. We’re seeing pretty rapid growth in that area of the business.
What was your greatest challenge last year?
Sheffield: The biggest challenge for both John and I is time. There never seems to be enough time to do all the things we want to accomplish. Looking back at the last year, I’d say things came out relatively smoothly.
Barbieri: I would agree. The objectives that we want to accomplish are multifaceted. So the challenge is to make sure that we execute on the acquisition, the assimilation of the culture and the organic growth. And you need to do it all without disruption to the day-to-day business. That becomes a challenge when you go from a couple hundred employees to now over 1,000, and all of that is accomplished in a 12-month period.
How do you view the industry changing in the future, and what are you doing to adapt?
Sheffield: The industry is going through a lot of consolidation. Why would you want to join an organization like ours? It’s power. You have to have buying power, the ability to invest in your organization and create a better solution for customers. In joining us, that’s what you get. We’ve been talking about the industry changing for years, and that change has accelerated the last few years. The business is your largest asset, and you have to make sure you take care of that asset, protect it and make sure that it can continue to win. Overall, when we look at the business, we’re very comfortable with what we see in our level of power.
What do you enjoy most about your job?
Sheffield: For me, it’s the people. It’s the self-actualization and pride of aligning yourself with a large group of such proud people, and that accurately describes our employee base. We enjoy going out and meeting new people as well; we’re still getting to know a lot of the people from the companies we acquired. They’re high-quality individuals.
Barbieri: We really approach our day-to-day duties as a work family. People make the difference, that’s the bottom line. Our work families are as important to us as our own families.
Outside of work, what do you like to do for fun?
Sheffield: It’s all about the family. I have a new granddaughter named Regan—she’s an angel, a little princess. Her older brother, Cooper, he’s a rambler. I’m a relatively new granddaddy. I have a ranch out west of Austin; I raise fish out there, feed the animals. We go out there a lot just for the solitude, and I like to unwind that way.
Barbieri: From my perspective, it’s the same—family, friends and five grandchildren. I run a lot with my Lab, Bruno (short for Brunello, the Italian wine). He and I are buddies and he keeps me busy. And there’s always time for a bottle of red wine.
