DEX Imaging executives Dan Doyle Sr. (left) and Dan Doyle Jr.
So while many industry observers were focusing on Xerox, waiting to hear about how the manufacturer will be transformed and perhaps garner the distinction of being the top news story of 2019, DEX Imaging was looking for someone to hold its proverbial beer.
Last Friday’s announcement that Staples Inc., the nation’s largest office solutions provider, had inked an agreement to acquire Tampa, FL-based DEX Imaging sent shockwaves throughout the industry. With sales eclipsing the $300 million plateau, DEX Imaging is the largest independent dealership in the country. Terms of the deal were not disclosed.
According to the official release announcing the deal, DEX Imaging’s executive team—led by Chairman Dan Doyle Sr. and President/CEO Dan Doyle Jr.—will continue to lead the dealership going forward. The release added that customers will continue to receive the same industry-leading service they’ve come to expect from DEX Imaging while gaining access to the many benefits that accompany joining forces with Staples.
“Over the past 16 years, DEX Imaging has taken great pride in our ability to continually offer quality products and services, and most of all, provide a superior customer experience,” said Dan Doyle Jr. “Being a part of Staples will allow us greater access to industry leading technology, and a world-class supply chain to accelerate our position as the premier North American print management provider.”
DEX Imaging is withholding further comment pending regulatory approval from the government. Hart-Scott-Rodino (HSR) Act clearance ensures deals do not run afoul of antitrust laws but are generally a formality. As the office technology dealership space is still highly fragmented, this deal is expected to get the green light.
Big-Box Retail
It will be interesting to see how Staples and DEX Imaging can leverage their respective portfolios to widen their client scope.
Sandy Douglas, Staples
“Staples will continue to strategically invest in companies that can bring added value to our customers in the form of enhanced products and services,” said Sandy Douglas, CEO of Staples. “DEX Imaging has created strong relationships with their customers through exemplary service and tremendous industry knowledge in office technology.”
Headquartered in the Boston suburb of Framingham, MA, Staples provides products, services and expertise across office supplies, facilities, breakroom, furniture, technology, promotional products, and print and marketing services. The company supports businesses of all sizes, with delivery capabilities across multiple channels, including direct sales, e-commerce and mobile.
Industry Reaction
Jeff Gau, Marco
Some members of the office technology dealership’s M&A community believe the deal is a validation of the strength and vitality of the space. It may also be a sign of things to come.
“I think it’s great to have new players in the industry,” said Jeff Gau, CEO of Marco Technologies. “It demonstrates that we’re relevant and a great place to invest. Stay tuned…”
“I welcome the acquisition of DEX by Staples,” said Darren Metz, CEO of Nashville-based Novatech, which has aggressively built its own southeastern U.S. base through acquisition. “My first thought is one of congratulations to the Doyle family, who obviously hit a big payday after 20 years of hard work building up DEX, in part Phoenix-like on the ashes of Danka. Furthermore, the entrance of a large private equity-backed company like Staples into our space through such a significant acquisition further validates the viability of the MPS channel and the value of the dealerships.
Darren Metz, Novatech
“On another note, while assurances may be made that DEX customers and employees will only experience positive change as a result of DEX selling out to Staples, we believe that some customers or employees may experience change they view as unfavorable for their particular situation,” Metz added. “At Novatech, we welcome customers and employees who are now ready to explore their options other than Staples.”
Customer Services Strategy
Mike Dudek, president, CEO and founder of an industry M&A consultancy Zygoquest Group, and the author of more than 500 M&A deals in the industry—representing buyers and sellers—sees this move as a significant development from both a competitive and M&A perspective. The deal comes “better late than never” for Staples, in Dudek’s estimation.
Mike Dudek, Zygoquest Group
“Frankly, Staples strategically goofed with its product-centric focus when it did not embark on building a real customer services business some 20 to 25 years ago, when it was in a position to become a dominant player,” Dudek noted. “Staples lack of a real customer services strategy, which would have fueled a giant and most valuable service revenue annuity, was a primary reason Staples struggled and did not achieve much greater success. Years ago, Staples did a superlative job building their eCommerce business, but missed the boat on services. There is still no guarantee Staples will realize its full potential, but at least Staples has appropriately recalibrated its strategic direction.
“Since DEX Imaging predominantly operates in the southeast region of the United States, if Staples is serious, one can expect Staples to continue to roll-out its services strategy both organically and through additional acquisitions. Staples’ competitors might join the party, as well.”
