While we could discuss the ins and outs of the merger and acquisition theater on a weekly basis, alas, this week marks our final look at the subject for now, at least in terms of our state of the industry focus. You can check out the news section of our website, along with The Week In Imaging, to keep abreast of industry transactions involving dealers, manufacturers, suppliers
We’ll close out the month of August with some final thoughts from our panel of M&A heavyweights.
Dan Ruhl, a principal with Oval Partners—the financial catalyst behind Flex Technology Group—points out that one of the biggest developments in recent years is the wealth of alternatives for sellers to consider, as opposed to three to five years ago.
“When you’re moving forward with the transaction in this type of business environment, your ability to accomplish what you’re hoping to accomplish for yourself, your family, your management team and for your company, is much better today,” he said.
RJ Young has completed six acquisitions in the past three years, and President/CEO Chip Crunk notes the dealer is in the process of closing another deal shortly. Their integration woes are largely a thing of the
Resources play a considerable role in determining whether a company can accommodate multiple deals in a condensed timeframe, according to Crunk. “The only real danger in becoming too big too quickly is if you don’t have enough resources or the available talent to take on additional opportunities. If you’re missing one of those, then it’s going to be a challenge.”
Future Strategy
So what will the industry look like in two or three decades? Will it bear any resemblance to the dealer players, their technologies and customer bases? If the reins of a family business are handed down to a 30-year-old executive, will he/she find a path to profit that leads to their retirement?
One thing’s for sure. Any forward-looking plans need to be based on managed services.
“Is the copier industry, by itself, sustainable enough for the next three decades?” wondered Jeff Gau, CEO of Marco. “I would question that, which is why we diversified. Almost half of our business is IT services. We attend different conferences—HP, Tech Data and Ingram Micro—and that’s what they’re talking about, MPS and managed IT. That’s what copier people are talking about, and it’s the same with the VARs, because they’re looking for recurring revenue, too. We’re going to different industry meetings, and they’re talking about the same thing.”
Political Football
With the next presidential election just 14 months away, there’s always talk of the ramifications that a change in the oval office might bring. Jim Sheffield, president and CEO of UBEO Business Services, notes most business owners are concerned about the tax landscape, and the impact a change might have on capital gains taxes.
“I don’t worry too much about the economy; we’ve been through a lot of tough times in this industry,” he said. “Because it is the center of free enterprise, you have to have it geared to do business. It’s relatively recession-resistant, as much as any business can be. When you’re doing something like this and thinking about liquidating your largest asset, taxes are something sellers really need to consider.”
