It’s been 28 years since he entered the office technology industry, but Brad Knepper loves the business as much now as he did when he was just starting out.
He still gets a charge out of talking to clients, closing deals, locking horns with the competition and, of course, besting them. Knepper’s top executives have been with him pretty much since he purchased All Copy Products in 1999; one is a friend from his grammar school days, another from college. He doesn’t say as much, but loyalty appears to rank high on Knepper’s list of favored traits.
“I love that things are so different every day—the new products, acquisitions and challenges,” Knepper related. “I love the deal, the strategies, beating the competition. And I’ve got some great leaders to help me along the way.”
For anyone who keeps tabs on the pulse of the industry, Knepper is a familiar face. Whether it’s the Copier Dealers Association, dealer advisory boards for several manufacturers or any number of OEM dealer meetings or excursions, Knepper is there. The president and CEO wonders if he spends too much time away from his ever-growing, Denver-based dealership, but he knows these gatherings—such as the Executive Connection Summit—are too vital to miss. They provide a forum for gaining insight into business/market conditions, and unfortunately, these meetings also yield a validation and an empirical truth—life in the dealer space is currently more challenging than it’s ever been.
The last two years may have tested Knepper’s love for the industry, but his resolve remains steadfast. Many questions remain unanswered, such as a clear path to rebuilding and restoring culture in the age of the Great Resignation (or as one dealer noted at ECS, the Great Relocation). It’s a dilemma with no simple answers.
The loss of print volume has long been reconciled, but supply chain issues and other pandemic-related challenges pale in comparison to the plight (or flight) of employees. While there have long been account executive vacancies at most dealers, including All Copy Products, Knepper currently has a need for 30 to 40 sales reps. He’s also in the market for talented IT professionals to fortify his Verticomm IT services division, a $10 million business on the verge of a bona fide profit breakthrough. Security cameras and hosted phones have provided a much-needed shot in the arm, and an influx of IT professionals may be the missing piece that enables Verticomm to realize its potential.
Culture Issue
“This is as big a battle as we’ve had in the past 28 years,” he offered. “We have to watch our culture very closely. It’s all about setting expectations and not compromising on them. We need to set the right examples; otherwise, we can lose what we spent a lot of time building.”
But through all the challenges, one thing remains clear. Knepper and All Copy Products continue to build. That’s evidenced by one crazy day during 2021 in which he pulled off two M&A deals totaling 14 branches that added approximately $30 million in sales. The integration of these holdings continue today, but let’s start at the beginning of Knepper’s journey.
M&A Genesis
Much has changed since Knepper took the helm of a seven-employee operation in 1999. He’d worked for IKON Office Solutions, but made the bold move of taking out a half-million dollar loan at a criminally high interest rate and spent the next 10-12 years building the company primarily through organic growth. Initially a Konica dealer, Knepper added Sharp around the five-year mark and then started down the road of acquisitions, mostly branches in Colorado. He added a small Canon dealer in the mid-2000s and made inroads into Fort Collins and Colorado Springs before reaching outside the state into Phoenix. Today, the dealer has a strong Colorado network as well as a presence in Kansas City, three cities in Arizona (Flagstaff and Tucson in addition to Phoenix), along with Omaha and Lincoln, Nebraska.
After the initial decade or so, the acquisitions began to steamroll. In all, he’s closed on 26 deals, more than half of which fall in the sub-$1 million range; mostly additions that helped fortify existing holdings. Still, through April of 2020, 65% of the dealer’s growth was organic in offering Konica Minolta, Sharp, Canon and HP products. Verkada security cameras and hosted phones through Intermedia have proven to be pandemic-era springboards to profit, and the January acquisition of a mailing systems dealer (Multiple Services) gave All Copy Products another customer segment in which to offer its rich catalog of products and services.
Still, COVID-19 has proven to be a tough business maze. At its lowest, All Copy Products’ service revenue dropped to 72% of pre-pandemic levels, a figure that’s rebounded to 94% and is expected to level out courtesy of new client acquisitions.
“We’ve gotten to the point where we can stop looking back and start looking forward,” Knepper noted. “We didn’t sell a lot of new business in 2021, and we’ve traditionally been able to do 50-60% new business and expand into new territories. We’re probably in the 15% range for new business through COVID. We’re growing through existing clients with the security cameras and phones, and we grew the IT business some, but new imaging clients are tougher to obtain the last two years.”
The Big Close
Wheeling and dealing reached its climax in 2021 when Knepper closed on two deals, one with Konica Minolta for branches in Fort Collins, Colorado Springs and Grand Junction, Colorado; Cheyenne, Wyoming; Flagstaff, Arizona; and Omaha and Lincoln, Nebraska. Seven more southern Colorado locations came in a deal for Gobin’s Inc., a Canon and Konica Minolta dealer not previously covered by All Copy Products. Roughly 70 Konica Minolta employees and 40 Gobin’s team members joined the ranks of All Copy Products on the same day. Knepper also obtained Innovative Office Systems—an FP Mailing Solutions equipment dealer—in late 2020, and the dust has yet to settle from the flurry of deals.
“The timing never works out right. I will say that I’ll never try to do two acquisitions totaling 14 branches on the same day ever again,” Knepper remarked. “I handle the due diligence, along with my executive vice president, CFO and VPs of sales. We dig in well in advance, do a lot of homework. We also do a good job of keeping a fair amount of staff we acquire. In a lot of cases, we buy dealers that don’t have strong sales teams, but we look for companies with a strong support staff. If they have good people, we try to keep them. That helps with integration; they’re out there telling clients it’s going to be OK and that not much has changed. They become cheerleaders for us.”
Knepper had spoken with then-Konica Minolta top exec Rick Taylor regarding certain branches. The two conversed prior to Christmas of 2020, but it wasn’t until after the New Year that talks intensified, and a deal was hammered out in less than three months.
“The deal came together so quickly that neither ACP nor Konica Minolta had much time to prepare. But Konica Minolta has worked very closely with us as a great partner getting through the details and I would do the deal again tomorrow. If they came to me with more (branches), I’d say yes but might get a little pushback from my admin staff,” he added with a chuckle.
Great Relocation
Knepper has been able to maneuver around the loss of customers and business through the past two years by controlling expenses. Those were challenges within his control. The aforementioned loss of employees, however, has been impactful on different levels. Knepper still has his top lieutenants, but a number of middle management personnel/friends departed, as have other employees who decided to make fundamental changes in their careers and lives. Some wanted to relocate, others preferred jobs that would allow them to work from home on a more permanent basis.
When Knepper brought back the balance of his employees on premise, there was some resistance and, subsequently, departures. Like many dealers, All Copy Products finds itself essentially trading employees with other companies—not all of which are office technology firms—whose employees also decided to look elsewhere. That meant more recruiting and training new team members from inside and outside the industry. It was frustrating for Knepper, who initially resisted the urge to make changes to his sales compensation plans despite the fact that many clients simply renewed contracts and kept existing technology in place. In most cases, top reps and management saw their incomes increase year over year despite the drop in sales volume. In hindsight, Knepper believes he should have made comp plan adjustments to mirror the changing business climate.
In short, it’s simply not sustainable for any dealer. “Employees are being forced to see the business side of things, and it’s challenging for people to change mindsets,” he said. “I think we’ll see more employees go elsewhere, and they’ll find their new employer will have the same expectations we do. But they weren’t willing to get back on track with us. The compensation on assignments being promised by other industries isn’t sustainable. I feel that tenured reps and managers are making changes that they’ll regret.”
The upshot for 2022 is that many clients will soon be compelled to make necessary changes and upgrades to hardware and technology as the existing gear continues to age. That will help bolster All Copy Product’s bottom line, even if the MIF counts aren’t significantly increased.
Say Cheese
With net-new clients at a premium, Knepper has witnessed solid gains in the Verkada security cameras and Intermedia hosted phones proliferated in existing accounts. Copier reps can readily grasp the camera technology, and All Copy Products took the extra step of creating a cabling division to reap another 25% in revenue for installation. Thus, even with cameras seen as a commodity, reps don’t have to face significant negotiations on installation costs.
The biggest competition comes from clients that would rather spend $50 on a camera from a retail store. But while the imaging quality may be adequate, off-the-shelf solutions are lacking in robust software and some of the key feature sets such as facial recognition, environmental sensors and access control. All three features can be combined and controlled on one pane of glass, resulting in an ROI of months versus years.
“It all comes down to finding the right clients that are willing to invest,” he said.
All Copy Products entered the phone space six years ago with the acquisition of a company that specialized in premise-based phones, believing growth opportunities existed for clients that felt hosted phones were too expensive. But when the dealer saw how hosted systems were more economical on a per-user basis, Knepper and Co. pivoted in that direction. In fact, the dealer swapped out its own fleet of 500 phones and is leveraging its own experience in converting premise clients to hosted systems.
Growing Pains
The IT division at All Copy Products truly took flight with the 2015 acquisition of Verticomm Technologies. While it has grown to $10 million behind a staff of 60 employees, investment costs have prolonged the ROI Knepper envisioned. He acquired a company that offered private cloud and invested hundreds of thousands of dollars into maintaining a solution that could compete with public cloud options. But while clients generally are attracted to local/private options for hardware and services, it didn’t translate on the cloud side. Knepper found he couldn’t scale to the necessary degree and is in the process of moving all cloud clients to a public cloud option.
Phones and security cameras have helped set the IT division on the right course, and Knepper is bullish about its future on the condition that All Copy Products can satisfy its IT staffing needs. That remains one of his greatest challenges. Knepper invested in reconfiguring his offices to allow staff, including IT, to be safely distanced on premises, where productivity is best realized.
“It’s taken us five years to figure it out, but we’re really poised to become profitable,” he said. “We’re a large MSP, so we had a scale, we had credibility, and now I think we’re ready to start making money. It’s just taken us a long time. I’ve heard a lot of dealers say the pandemic benefited them on the IT side, but aside from phones, that wasn’t the case for us due to staffing challenges. But I think we’re getting closer to where we need to be.”
Looking Ahead
Re-establishing culture and obtaining optimal staffing levels will be critical for all dealers to gain traction on the back side of the pandemic, according to Knepper. Commitment is a two-way street, and Knepper—like many of his contemporaries—has demonstrated flexibility. But it’s difficult to compete with employers who continuously lower the bar in terms of hours and on-premise expectations. When other employers make exceedingly employee-friendly promises in their recruiting practices, he notes, it creates a dangerous race to the bottom as it relates to productivity.
The dealer is unrelenting in its quest to draw in clients. Behind the efforts of Chris Williams, All Copy Products’ marketing director, inbound lead generation via website optimization has produced an average of 55 leads per month. Organic, net-new revenue has increased by $1 million per year as a result, exceeding the goals Knepper and Co. set over the past two years. This has been especially effective in drawing in business for the phone and security camera segments.
Knepper believes the acquired companies will be fully integrated by the end of the first quarter. While he would be satisfied with making 2022 the year to concentrate on cross-selling and getting all the new team members trained and up to speed on the company’s offerings, Knepper won’t shy away from acquisition opportunities that advance his game plan. He estimates the company will hit the $110-$120 million mark in 2022, aided by a full year from the Konica Minolta and Gobin’s acquisitions and the other completed deals.
“I don’t need another acquisition, but every time I say that, three more opportunities will show up that are perfect,” he said. “It will be nice to use 2022 as a year to focus on getting really good at what we’re doing so that we’re not chasing our tails. I think we’re going to have a nice growth year, but I’m going to be conservative with our forecast. We’re not going to add 40 salespeople tomorrow, but I think we can position ourselves so that in 2023, we’ll be ready for a really big growth year.”
Supercharging the Revenue Engine: Knepper’s Plans for Generating Organic and Acquisition Growth
In spurring growth during the most challenging of business environments, All Copy Products President and CEO Brad Knepper has opened the door to increased opportunities through adding new products, optimizing his sales and support teams and adjusting the firm’s market approach.
Client retention has been a critical focus during the past two years. To that end, All Copy Products added a team of account managers that overlay its copier sales team, including IT sales reps selling phones and security cameras and specialized reps for mailing equipment, water and coffee, and MPS. That helps with matchups in competitive scenarios against dealers that have a single sales team backed by a support staff.
“We feel that having this level of expertise going into an account gives us a leg up on the dealers with one person trying to sell everything,” he said.
While net-new business has been tough to ferret out during the pandemic, Knepper is mindful of the types of clients he onboards through future acquisitions. Some of the clients are better geared toward lifestyle-sized dealerships and companies in the $500,000 to $750,000 revenue range as opposed to a $100 million-plus performer such as All Copy Products.
However, when Knepper buys a firm that specializes in postage meters or phone systems, oftentimes they have relationships with larger end-users. That enables Knepper to offer these newly acquired end-users a wider breadth of products and services. Thus, onboarding the right clients will be vital to net-new growth.
