Between the Lines: A Game Changing Sale in the Dealer Channel

You wouldn’t think that one of the largest dealerships in the country would ever end up putting itself on the market and then selling to what probably was the highest bidder, but think again. And think hard because that’s what happened with Marco, Inc. the St. Cloud, Minnesota-based office technology dealership with yearly revenues of approximately $212 million and more than 25,000 customers.

Yeah, right, huh?

The deal closed on October 30 and the news is just starting to hit the wires now.

The dealership was acquired by Norwest Equity Partners based in Minneapolis. The financial details were not revealed, but it’s safe to assume that the sum was substantial.

Marco has 920 employees in 42 locations in the Upper Midwest, and will continue to operate with CEO Jeff Gau and the current leadership team.

“Our firm has extensive experience working with companies like Marco, and we are excited to partner with Jeff Gau and his management team to help them continue growing and building into an even stronger company,” says Tim DeVries, Norwest Equity Partners managing general partner, in a press release. “Jeff is an innovative thought-leader who knows how to not only execute, but create value. Marco’s leadership, culture and customer-centric approach were key investment drivers for us.”

In an interview with the St. Cloud Times, Gau said Marco headquarters will remain in St. Cloud operating under the same name. Additionally, he reported that no employees will be laid off, and the company plans to expand, including the addition of a 30,000-square foot building adjacent to its St. Cloud headquarters next year.

“The last thing we want to do is wreck a good thing,” Gau told the St. Cloud Times.

Marco, founded in 1973, has been owned for the past 28 years by an employee stock ownership plan (ESOP). According to the Minneapolis/St. Paul Business Journal, the ESOP will now become a 401(k) retirement plan match for all employees.

Gau also noted that the time was right for a sale, explaining that as the company’s stock value has grown and older employees look to retire, it’s getting more expensive to buy their stock back.

“If you’re using your money to buy stock back from employees that are leaving and not using that money to buy companies and driving your (return on investment) and your acquisitions, that model’s going to start to change,” observed Gau in the St. Cloud Times. [While Marco is debt-free and has strong financial performance now,] “if you look out the windshield five or six or seven years, it could be a problem. To be good stewards of our employee-owned company, I think the timing factor … would be to get on that now.”

Gau further explained that Marco chose Norwest Equity Partners because of its strong portfolio, similar values and because it agreed to keep the Marco name and the headquarters in St. Cloud.

Once again change happens fast and furious in the document imaging industry, and this time it is one of those changes that makes one seriously question the status quo. Actually, this is a game changer for the industry with a dealership being sold to a private equity firm.

Let’s not lose our minds either and think that private equity companies are going to be scooping up copier companies, but what they may be doing is looking for attractive technology companies like a Marco with a proven track record selling a broad range of technologies and services.

And there are a growing number of dealerships that fit that bill and this transaction is going to make a lot of them realize that there’s another alternative out there besides selling to another dealer or a manufacturer.

Thanks for reading.

Scott Cullen
About the Author
Scott Cullen has been writing about the office technology industry since 1986. He can be reached at