The Office Equipment Dealer Acquisition Frenzy: What Does It Really Mean?
There has been a lot of activity in the office equipment of late, and it all revolves around dealers acquiring other dealers. Of course we’ve always seen this happen, but the difference now is frequency and size. Dealer after dealer after dealer are are buying or being bought in record numbers.
The buying frenzy happening in 2018 is different. For the first time in industry history we are seeing the rise of several large “Mega Dealers”. There mission seems to be to buy up as many dealers as possible before their rival Mega Dealers get the good ones first.
Who are some of these Mega Dealers? There are a bunch of them, but here are 3 I’ve noticed doing a lot of acquisitions:
Marco: Marco is so serious about growing through acquisition that they have a page on their website dedicated to helping smaller dealers to see if the time is right to sell (and sell to MARCO!). To date they have acquired over 37 smaller office equipment and managed services companies. They don’t show any signs of slowing down.
VisualEdge: Another Mega Dealer that is buying up companies like crazy. Like MARCO, they are offering both office equipment and managed I.T. services. Most recently they have acquired Mercury Document Imaging, Kenmark Office Systems, and Dunn’s Business Solutions, and that’s only since July of 2018. And yes, they also have a page dedicated to enticing dealers who may want to sell.
Global Imaging Systems: This one is a Xerox owned company. Just like the first two mentioned, they have a page dedicated to acquisitions. They’ve been acquiring companies for a lot of years but they are fighting for dealers just like VisualEdge and MARCO.
FlexPrint: Their model is a little different and they don’t really consider themselves a Mega Dealer (though, well, if it looks like a duck, quacks like a duck…). They allow the dealer principals to maintain quite a bit of control, some liquidity and an opportunity to reinvest. You can see their approach on their webpage.
This list is not complete, there are other Mega Dealers out there. But you get the picture.
Why are Mega Dealers doing what they do? A few thoughts:
Economies of Scale: They are buying market share and using economies of scale to become leaner and to get preferred pricing. As we all know, the bigger you are the better your price.
Mature Market: If you look at the office equipment channel with an honest eye it is in a mature state. There are no new reasons to print, no dramatic increase in why people produce pages. Most experts agree that page volume per user is actually in slight decline. In a mature market it is much better to be large.
New Offerings: Mega Dealers will have a massive opportunity to sell existing managed print customers new things. All of them have Managed IT offerings and additional layers to sell existing customers. The opportunity for increasing wallet share is very attractive.
Is this good or bad for the industry? I’ve heard some people say that it leads to less choice in the market, but how much choice do people really need? Besides, there are a ton of small regional office equipment dealers who will continue on their own, so I don’t think choice is going to be a problem at all.
As the Mega Dealers continue to acquire it will be interesting to see what our industry looks like in a few years. What are your thoughts? Do you have some points that we didn’t raise that might be of interest to our readers? We look forward to your input!