The license plate on Bob Ferland’s car reads “$55 million,” and the president of Axion Business Technologies in Cranston, RI, has this message to constantly remind him of his growth goal. While it is highly unlikely that he will forget his target, he may need a new plate engraved as soon as next year.
The “Drive to 55” may sound like a Sammy Hagar tune, but it is Ferland’s current performance goal. The slogan is ultimately doomed to irrelevance, as Axion’s perch at the $55 million mark is likely to be a brief stay. Ferland is at the epicenter of a New England nor’easter that is consuming companies under the Axion umbrella and, in turn, under the Visual Edge Technology (VET) awning. He founded the company in 2004, after a 24-year stint with the IKON Office Solutions/Alco Office Products juggernaut, and Ferland gained an M&A education that would serve him well in building Axion.
Robert Ferland, president and founder of Axion Business Technologies, consummated six deals in an 11-month timeframe, adding American Copy Services, Janco, United Business Machines, A-Copi, Office Systems Vermont & New Hampshire and KenMark Office Systems
The moment Ferland hung his shingle, the acquisitions began to happen in rapid-fire succession. In all, he pulled off seven deals and grew the dealership to $12 million. After selling Axion to VET in 2016, Ferland resumed his M&A jag by consummating an impressive six-deal journey in an 11-month timeframe. Given VET’s unquenchable thirst for dealership annexation, the only question is this: what took these two M&A mavens so long to find each other?
Ferland expects Axion to post about $44 million in revenue when the books are closed on 2018. As much as the acquisitions have bolstered the dealership’s bottom line, organic growth has also played a large role in its ascension. Axion is vendor-agnostic—after all, it now carries the product lines of more than 10 major OEMs—and as Ferland gathers point people behind the firm’s MPS, MNS, managed IT and production print offerings, it is clear that Axion is not a one-trick M&A pony.
We spoke with Ferland about how the dealership’s most recent acquisition of KenMark Office Systems and continued growth of its product and service portfolio will only serve to continue Axion’s whirlwind activity into the foreseeable future.
How is business in 2018?
Ferland: We’re being helped by an amazing economy. That’s good news for business, but bad news from an HR standpoint. With four percent unemployment, it’s tougher to find great people, especially in sales. There’s a lot of pent-up demand for technology, especially on the MPS, MNS and IT services side. The copier industry is an $11-billion-per-year business with supposedly flat-to-negative growth. But we found with the companies that we have acquired, we’re gaining organic growth. We bought a company in Connecticut 11 months ago that had $4.1 million in revenue, and KC Sirowich (now our VP of sales) grew it to almost $5 million annualized via mostly organic growth.
Customers are now more receptive to us coming in and doing surveys to understand their document workflow and their hidden expenses through their SG&A expenses related to office equipment. Years ago that wasn’t possible, or maybe we are just getting better at it. Customers want new technology and want to stay ahead. We are doing a pretty good job this year of digging into their expenses to see where they spend, and then with added technology and better resources, we help them to increase their ROI.
What are your drivers for organic growth?
Ferland: As we grow, we are able to add more products and services to the lineup. With our Connecticut acquisition, for example, they were a top-notch copier company, but they didn’t offer MPS, IT services or MNS. We also acquired a company that sells office furniture, allowing us to cross-sell through our other acquisitions. These (acquired) companies had to be lean and mean on compensation. We track Pros Elite and can look at benchmarks for compensation. If their structure is too low or too high, we’ll adjust. That is another aspect of organic growth. We are aggressive with telemarketing and are very successful in setting up appointments for outside reps. I have a sales and marketing background, so I push our sales reps to be entrepreneurial and creative. We take pride in being a hard-driving sales organization, and we have taken an aggressive approach in bolstering our sales organization throughout the region. Our strategy is really paying dividends.
The home of KenMark Office Systems, which will soon be occupied by Axion as well
What does Axion Business Technologies pride itself on?
Ferland: We make a conscious effort to ensure quality customer service is not just talk. We rely on CEO Juice, which has a Net Promoter Score that uses customer surveys and illustrates what good service looks like from a customer’s standpoint. Our score has been as high as 85. We are constantly asking our customers how we are doing. If we underperform or don’t get a good survey, we use that feedback to make sure we change our systems and ensure it doesn’t happen again. And despite our growth, we are still able to run Axion like a family business—with the feel, the creativity and the entrepreneurial spirit that has always been important to us. We have a saying that I coined: “Take care of the customer first and ask for forgiveness later.” We get a ton of referrals from law firms, engineers and city government. Customers have always liked us for our copiers and service, but we are bringing new services like MPS, MNS and managed IT. It’s helping to strengthen our relationships.
What was the driving force behind joining the Visual Edge strategy in 2016?
Ferland: When I joined VET 24 months ago, they were at about $40 million; they are now approaching $300 million nationally. (Senior Vice President) Michael Brigner knew that I had done a lot of acquisitions and that I knew how to roll-up and integrate companies, which they found attractive. By acquiring Axion, they knew they could rely on me as the New England core president; their time investment here would be minimal. Not only would I run my own business, but I would facilitate the acquisition of other dealers and roll them up on my own. That is exactly what I have done since 2016. VET’s pitch was that I could keep acquiring dealers throughout New England, and I could expand the things I couldn’t necessarily do as a stand-alone business of my size. That appealed to me because to add MPS, MNS, IT services, production print and wide-format, it takes a massive amount of cash. As a small, $12 million dealership, we were always nervous about cash-flow. So when Visual Edge came along and said we can do all of that stuff on their dime, it sounded beautiful. Visual Edge can also help us with national distribution. But perhaps the key points for me were that I could keep all my same people, keep the name on my building and maintain all our same customers. It was a seamless transition. Most of our customers were not even aware that we sold the business. It’s cool that we were able to keep our culture.
Bob Ferland (center, white shirt) and the rest of the Visual Edge Technology member presidents enjoy a stogie and a refreshment
Another advantage to joining Visual Edge is all the core companies get together quarterly and share financials, best practices and metrics. At one meeting, Brad (Craft, Image Source) had a great idea related to IT and I jotted it down. I came back on Monday of the following week and implemented the idea right away. We are constantly trading best practices and industry-related ideas. I love the organization; there’s no bureaucracy and we don’t have the same cash-flow or operational worries of a small dealer. With VET, we have the best of both worlds.
The acquisition of KenMark Office Systems gives you a stronger hold on the southeastern Massachusetts market and New England in general. What other benefits does this deal provide?
Ferland: They were a big competitor; he (KenMark owner Ken Pedicini) would steal my accounts and I’d steal his. We talked a few times about getting together throughout the years, and finally, he realized it was a good time to sell. He still has the same passion for his customers and employees as I do. We acquired his company and will move our Cape Cod operations down to Mashpee, MA. Ken is running the whole area as the senior vice president of sales for Cape Cod, the islands, southeast Massachusetts and the south shore Boston area. The benefit for our customers is being able to introduce new offerings like office furniture, but on the flip side, we have IT services, MNS and MPS that Ken will be able to offer to his customer base.
When you do these acquisitions in a condensed geographical area, you are able to run your business a lot more efficiently for your customers. Previously, we would have to send our copiers an hour and a half away from Rhode Island, set them up in the Cape Cod office and then deliver them. Now, we have enough critical mass between the two companies that they can each be self-sufficient. It’s like having a mini Axion within Axion. We can set up our own machines, deliver them and provide local service. It allows for more specialization when you do these acquisitions in a tight geographical area. We will end up merging our sales, service and admin departments into the same building, with Ken running it for us. We will make the move within the next 60 days. My Cape Cod lease was up in July, which was coincidental, but it worked out well for us.
Is there a product or solution you’re looking to add in the future?
Ferland: Even though the overall copier market has been flat, two areas of growth are production print and wide-format print. In order to successfully gain market share, you need a dedicated person to overlook it. We discovered that one of our managers, Ray Vicario, had seven years’ experience selling Xerox production print products. So it was a natural fit to move him into selling Konica Minolta production print equipment. We see that being a great product for us. We are also actively recruiting a dedicated managed print specialist, believing we can grow MPS to 20 percent of our business over the next couple of years. We also see an opportunity to add another $8 million in MNS and managed IT just by selling it into our base of 15,000 customers.
What was your dealership’s biggest win last year?
Ferland: Our biggest takedown last year was the third-biggest school district in Massachusetts. It included 115 MFPs, plus Papercut software and some other specialty software. Our sales rep has had the account for years. The real beauty in this relationship is our opportunity to introduce all the other products and services that are now available within our region.
What do you look for in your employees? How do you recruit and retain good ones?
Ferland: My vice president of sales, KC Sirowich, came to us when we acquired American Copy Services 11 months ago. He was their co-owner and stayed on as sales manager, but he grew the business organically and so dramatically that we promoted him to VP of sales for all of New England. Some of our best players have come from our acquisitions. We do everything we can to retain employees at each location. Where compensation is concerned, we do not have a cookie-cutter approach. We do everything we can to make sure we get the hardest-working, brightest people and pay them fairly. When we hire new talent, we look for those who will fit well in our culture, work well with fellow employees and will be employees our customers will enjoy working with. Prospective employees need to pass the “dinner test.” If our current employees don’t feel comfortable with them over dinner, then our customers probably won’t, either. We hire bright people who have fun personalities and we pay them slightly above the industry average. Not only do we want to attract the best, most talented people, but once they are here, we want to keep them. In fact, most of my core team has been with me from the beginning. Helene Martinelli, controller; Daniello Cimarelli, service manager; Terri Lonergan, sales support; Joe Silva, service technician; Kirk Varatta, supplies/dispatch and Jack Hawkins, shop manager, are all part of my original team from 14 years ago.
More than 65 sales reps congregated at a mid-year New England sales kickoff in Newport, RI. At top, a sales rep reaps the benefits of qualifying for Axion’s President’s Club
Who do you see as your biggest competition, and how do you differentiate your company from them?
Ferland: Our philosophy is to make quick decisions. The buck stops here—no bureaucracy, no big shots. Some dealers will sell you something and then come back in four years when the lease is up. We have a unique quarterly review process for our customers. It’s another way to ensure the customers’ expectations are being met, and it is a service that our competitors do not provide. With Axion, everything is under one roof, all the parts and supplies are local and real people answer the phone. We try to be close to the customer in all respects and most of the time, we do just that.
What are your goals for 2019?
Ferland: I have a license plate that says $55 million, so there’s no turning back (laughs). We are going to drive to $55 million and continue to fill in the infrastructure gaps with additional acquisitions in New England. I have a pipeline of about $100 million in dealer prospects that I will be engaging over the next 24 months. I think the $55 million goal is easily within reach. At this point, we just have to make sure the investments we made in 2018—the dedicated MPS rep, dedicated MNS expert and dedicated production print specialist—can deliver. We also hired a new CFO to fine-tune the backroom operations. The way we have positioned ourselves, we could likely build the New England core to $100 million and sustain it without a hiccup or customer disruption.
How do you view the industry changing in the future and what are you doing to adapt?
Ferland: I think there is going to be more consolidation of manufacturers. For example, with all the acquisitions I’ve done, we probably carry the majority of manufacturers, at least 10. The field is too crowded and I see that changing. MNS and IT services will continue to grow like crazy, and the successful companies will be the ones that do well in these areas. Those are the companies we will be looking at. And while we continually fight to capture more print and MFP volume, it is important to ensure that the right software is on all devices. More than ever, to thrive in this business today, you need to be fairly flawless in your execution and our goal is to get better all the time. The margin for error is far less than it was 30-40 years ago, so we have no other choice.
What do you enjoy most about your job? What are your least favorite aspects of it?
Ferland: I am from a family of teachers and educators. My father was a principal and both my sisters are teachers, so I think education is in my DNA. Developing people really appeals to me; I love mentoring future leaders. People like Brian Edwards and Mike Cintolo went on to become leaders after working for me back at IKON—Brian eventually served as President for IKON NA, and Mike was a district president. I like to think I had some influence on their development. I enjoy teaching through benchmarking, helping people understand metrics and identifying what good should look like in every aspect of our business.
The part that I don’t like is confrontation or having to push people to get results. The people part can be tough; you’re trying to drag greatness out of them and get them to a certain number. I just want to be happy and have fun with them, but that is not always the reality. In the end, the greatest accomplishments are the result of short-term pain.
Outside of work, what do you do for fun?
Ferland: I love to travel with my wife and two daughters, who are 21 and 28. Family vacations, especially overseas, have taken us to some pretty awesome places, including New Zealand, South Africa and Dubai. Fortunately, this industry gives me the opportunity to travel extensively. My neighbor once asked what I did for living and was surprised when I said I was a copier salesman. He thought my family was in the witness protection program, because the blinds are always closed and we are never home.
I am passionate about golf and my goal over the next 30 years is to play on the top 100 courses in the world. I am also an avid skier and I love to run 5Ks. And even at my age, I still play ice hockey every Tuesday morning in a men’s league. It is the only place where you can smash heads for an hour and a half, then at the end of the session, shake hands, give the guys a hug and do it again next week.
