Just as we were putting this issue to bed, news broke that Xerox, recently flush and free of billion-dollar litigation, was considering the unthinkable: a cash-and-stock offer to acquire HP. Yes, Xerox acquiring HP—not vice versa. In fact, the Wall Street Journal reported the cash-and-stock offer being mulled by Xerox’s board of directors would represent a premium to HP’s $27 billion market value (which, in itself, is three times the size of Xerox’s). Funding would come via an informal commitment from a major bank. HP also confirmed receiving an offer from Xerox.
As you read this, perhaps the sides have already shaken hands and are just awaiting government approval and customary closing conditions. Regardless, it further illustrates the dizzying pace in which change is being thrust upon our industry and the business landscape in general. People, companies and technology are constantly evolving, and that’s a common thread among our top 10 stories of 2019. The business landscape has a way of correcting itself amid the tide of trends and the shifting needs of end users, not to mention supply and demand. The major players are strategically placing their pieces, and when necessary, snapping up pawns or joining forces with other players to give themselves an advantage.
In the end, it’s about being an agent of change or a victim of it. As these stories indicate, the biggest newsmakers are those who aren’t waiting around for those shifting tides to wash them away. For your consideration, and in no particular order, we give you the top 10 stories of 2019.
STAPLES ACQUIRES DEX IMAGING. Hard to believe, but the most jaw-dropping deal in recent memory actually happened during 2019. It’s a pairing of one of the nation’s largest office technology dealers and office product retailers, and these players are quietly and strategically formulating their marketing approach. The silence that has radiated from the combined entity has been absolutely deafening, leaving prognosticators to forewarn how much damage a $16 billion concern could unleash upon the industry.
The rumor mill has been adding extra shifts with some mind-blowing future scenarios. Anonymous sources have related that Staples is currently, or has been, holding talks with multiple nine-digit revenue office technology dealer heavyweights—one in the Midwest region, the other on the West Coast—about joining the collective. Certainly, even given the bounty of M&A action that’s transpired in recent years, this industry remains quite fragmented. Attempting to add properties the size of, say, a Pacific Office Automation and/or a Marco would perhaps run afoul of the Hart-Scott-Rodino Act, which adds market protection against antitrust law violations. This, of course, is purely speculative, but certainly makes for great theater. So pass the popcorn.
FAMILIAR FACES IN NEW PLACES. There have been no fewer than seven major appointments or promotions to leading dealer and manufacturer corner offices during 2019. This past spring, former Xerox Global Imaging Systems top exec Dan Cooper assumed the mantle of CEO with Nashville-based Novatech following Founder/CEO Darren Metz’s decision to transition into the executive chairman role. Sharp’s former top honcho, Doug Albregts, raised many eyebrows when he accepted the position of president at Marco of St. Cloud, Minnesota—which was announced, ironically, during the week of the Sharp dealer meetings. And at the tail end of 2018, Patrick Flesch was promoted to president of the family-founded Gordon Flesch Company.
On the OEM side, Lexmark tagged Allen Waugerman, its vice president and CTO, as president and CEO. Late last summer, Enrique Lores became president and CEO of HP, replacing Dion Weisler, who decided to step down due to a family health matter and return to his native Australia. Meanwhile, the former embattled Xerox CEO, Jeff Jacobson, took over as CEO of Electronics For Imaging (EFI), replacing Bill Muir, who stepped down for personal reasons. Muir had taken over for EFI Founder Guy Gecht in 2018. Jacobson, a well-traveled executive who had stints with Presstek, Kodak’s Graphic Communications Group and Kodak Polychrome Graphics, became an executive partner with private-equity firm Siris, which acquired EFI. At press time, Brother International announced Kaz Ikeda had been elevated to chairman of the company, with Don Cummins taking his place as president.
XEROX-FUJIFILM SAGA REACHES AMICABLE CONCLUSION. Well, it took more than a year to hash out, but there is now not only a peace between Xerox and Fujifilm, but also an agreement between the two entities to continue doing business. In early November, Xerox agreed to sell its 25% stake in Fuji Xerox to Fujifilm in a deal worth $2.3 billion all told. Xerox will continue to source hardware from Fuji Xerox moving forward. The terms also include the sale of Xerox’s 51% stake in Xerox International Partners to a Fuji Xerox affiliate. And putting a tie on the package is Fujifilm’s agreement to drop its $1 billion breach-of-contract lawsuit against Xerox, launched last year following the dissolving of the proposed $6.1 billion acquisition of Xerox by Fuji Xerox.
“These agreements reset our relationship with Fujifilm and provide both companies with tremendous opportunities to grow, together and independently,” said Xerox CEO John Visentin. “These agreements also unlock significant unrealized value for our shareholders, provide greater clarity for our customers and help us speed our transformation to a digital-first company.”
The peace accord ended a public saga that resembled a messy divorce and custody battle that played out during 2018. The proposed deal led to stockholder upheaval, spirited by top Xerox investors Darwin Deason and Carl Icahn, who felt the company was being severely undervalued. Then-CEO Jacobson and five other Xerox board members exited, and Visentin took the helm while vowing to protect the firm’s interests, which triggered a courtroom battle that dragged throughout much of the year and prompted Fujifilm’s breach of contract suit.
It was a busy 2019 for Xerox, which also rebranded its Global Imaging Solutions direct operations as Xerox Business Solutions.
EPSON MAKES HUGE INKJET PUSH INTO A3 MARKET. A $10 billion global performer that has a penchant for dominating markets it enters, Epson felt the time was right to mount an offensive in the office market space with A3 inkjet product. It was not so much an effort to upset the laser/toner applecart, but rather a strategic decision to arm dealers with a viable option. Within a 100-day window, Epson mobilized marketing, sales and service units to bring awareness to the market and pave the way for an A3 inkjet platform for the office, completing the trifecta that includes consumer and industrial applications. Mark Mathews, vice president, commercial sales and marketing, helped spearhead the initiative that sought to sign on 200 dealers by the end of its fiscal year.
At the heart of Epson’s inkjet value proposition is its PrecisionCore technology that is baked into the WorkForce Enterprise series of color and monochrome printers, as well as a series of A4 products that fit into the Enterprise realm. PrecisionCore has fewer moving parts, making it easier to service, and it uses a cold process that consumes less energy and is less taxing on the print head. Epson is also doing a lot of the sales legwork in helping drive end users to their channel partners.
INDUSTRY HEAVYWEIGHTS RAMP UP ACTIVITY. Last year, we chronicled how Visual Edge Technology (VET) was on an acquisition rampage, adding an unprecedented 18 dealerships to its collective. This year’s top tally of acquisitions belongs to Kelley Imaging Systems of Kent, Washington. Kelley reeled in eight companies—Empire Office Equipment of Lacey, Washington; four Montana firms—Mountain West Office Solutions (Billings and Helena), Copier Doctors (Butte), Valley Business Systems (Polson) and Midland Office Equipment (Billings); Competitive Edge Office Systems of Juneau, Alaska; Core Business Services of Medford, Oregon; and ABC Office Machines of Grants Pass, Oregon. The deals increased Kelley’s holdings to 25 locations across Washington, Oregon, Montana and Alaska.
Another high roller was Flex Technology Group (FTG), which operates under the Oval Partners umbrella. FTG onboarded seven companies to its platform: CBE Office Solutions of Irvine, California; Laser Technologies Service of Greater Boston; Millennium Business Systems of Cincinnati; Office Equipment of Texarkana, Texas/Office Equipment of Southern Arkansas, El Dorado, Arkansas; Century Business Services of Costa Mesa, California; and Shamrock Office Solutions of Dublin, California. FTG now has 16 dealer partners under its flag.
SHARP UNVEILS GENESIS OF SMART OFFICE PROGRAM. In another example of an OEM offering a paradigm shift (but not abandoning its MFP roots), Sharp used a series of road shows, culminating with its October dealer meetings, to spread the word about its Smart Office solutions. One of its cornerstone pieces is its celebrated Windows collaboration display (WCD), a 70” 4K Ultra HD interactive unit. In addition to enhancing collaborative end-user environments, the unit has built-in sensors that can connect to the Microsoft Azure Digital Twins IoT platform to monitor and measure environmental conditions.
Another showcase piece of the Smart Office program is the Synappx platform, which consists of three apps: Meeting, Go and Workspaces. Meeting helps simplify conference gatherings, removing the time drag associated with connecting to different platforms. Go provides the ability to use a mobile device for scaling content to a large display, scanning documents and releasing print jobs from an MFP. Workspaces handles the aforementioned environmental conditions of a meeting space.
Other technologies, such as its 8K displays, cameras and see-through displays, add Sharp to the growing number of manufacturers embracing solutions that foster collaboration among increasingly mobile and remote team members.
CLOVER IMAGING FLEXES REMAN MUSCLES. With its parent company 4L Technologies trying to reconcile $700 million in debt while exploring strategic options with an investment banking firm, Clover Imaging Group’s (CIG) executive leadership pledged business as usual. In a letter to customers, CIG wrote “…we are charging full speed ahead, as we have a healthy sales pipeline and continue to make key strategic investments to capture long-term growth opportunities.”
It didn’t take CIG long to make good on its word. In mid-September, the company announced it had signed an agreement to acquire the business assets of LMI Solutions. The deal, pending approval by the court overseeing LMI’s receivership process, included all of the company’s inventory, intellectual property rights and manufacturing equipment.
And with certain manufacturers putting the squeeze on aftermarket competition, CIG delivered its Jumpstart Printer Financing Program, which includes 0% financing, no money down on equipment for qualified leads, end-of-term options and customized pay structures, among other enticements. The reman also proffered a Silver Bullet Program that gave dealers up to 30% off their current pricing when they converted accounts that purchased HP imaging supplies to Clover’s remanufactured printer cartridges. Touché!
MERGERS & ACQUISITIONS ON PARADE. Every year, we rattle off the year’s biggest acquisitions with the fervor of an Academy Award winner trying to thank as many people as possible, fearful of missing anyone. This list is by no means comprehensive, but it provides a snapshot of the volume of deals that were transacted in 2019.
Among the notable deals, Novatech acquired Consolidated Copier Services and Copy & Camera, while RJ Young added Digitec and Automated Imaging Systems. Marco obtained Executive Technologies and Gordon Flesch Company snapped up Advanced Systems. Systel Business Equipment scooped up Complete Business Services and Advanced Imaging Solutions (Las Vegas) added Comworx. Centric Business Systems purchased Carefree Office Technology and Datamax acquired the copier division of Firmin’s Office City. GoodSuite brought on Advanced Office Automation and UBEO Business Services acquired AmPan Business Systems, its seventh deal in a 12-month stretch. WiZiX Technology Group obtained Edwards Office Systems and Advanced Business Systems acquired Office Specialists.
Among the manufacturers, Sharp picked up Saratoga Technologies. Xerox onboarded two multi-brand dealers—Rabbit Office Automation and Heritage Business Systems. Sharp Business Systems added Texas Document Solutions. Ricoh bought software specialist DocuWare and HP acquired Bromium. And on the venture-capital front, an affiliate of Siris acquired Electronics For Imaging (EFI) for $1.7 billion. At press time, Tech Data was sold to private equity firm Apollo Global Management for $5.4 billion.
CYBERSECURITY DOMINATES MANAGED IT/MNS CONVERSATION. The scourge of cybersecurity, including among businesses in the SMB community, is beginning to dominate the subject of managed IT/managed network services. CompTIA, a leading technology industry trade association, released a report this past fall, “Cybersecurity for Digital Operations,” that surveyed 500 U.S. businesses and found that 45% of companies are completely satisfied with their cybersecurity readiness. That’s up significantly from 2017, when only 21% were secure in their readiness. But that still leaves more than half of respondents believing they need to do more.
While this may present an opportunity for cybersecurity providers, it’s also a reminder that bad actors can strike anytime, anywhere. Recently, a repeat Elite Dealer revealed that his company had fallen victim to a cyberattack. While the company had data backup, it was actually more cost-effective to pay the ransom, as the backup process would have taken days to recover all of the data. Thus, even implemented solutions are not always a panacea in all situations.
BRISK ACTIVITY AMONG SOFTWARE AND SOLUTIONS. Late in the year, ConnectWise turned heads when it acquired Continuum and ITBoost, and created a strategic partnership with Webinfinity, yielding a business automation solutions suite. Continuum provides ConnectWise partners with A.I.-enabled service models to grow and scale in the areas of remote monitoring and management, security and data protection. Meanwhile, at the tail end of 2018, ECI Software Solutions obtained Print Audit, a provider of device and print management solutions, including tools for MPS, device data collection and document management.
Lastly, PrinterLogic—a leader in serverless printing infrastructure—acquired enterprise content management software specialist MaxxVault. The deal expanded PrinterLogic’s portfolio to include digital workflow automation, e-forms, content management, digital signature and secure storage. MaxxVault was rebranded as Vasion.