Our Virtual Leasing Panel examines the biggest trend transforming our industry today.
(Pictured above: The headquarters of Marco in St. Cloud, Minnesota, one of the industry’s most acquisitive companies.)
Our 2019 Virtual Panel series concludes in our May issue with a topic near and dear to every dealer’s heart, and pocketbook, leasing. Six leasing company executives responded to questions about declining print output and falling hardware prices, financing Managed IT and solutions, and their ability to handle e-signatures. Here, panelists offer their take on the acquisitions activity occurring across the channel.
Participants include Phil Buysse, SVP, division manager, office equipment, US Bank; Nick Capparelli, managing director, LEAF; Fred Carollo, office products originations leader for Vendor Equipment Finance, TIAA Bank; Michael D’Errico, director, Equipment Finance, Office Imaging unit, CIT Group Inc.; Jennie Fisher, VP-general manager, Office Equipment Group, GreatAmerica Financial Services Corp.; and Rob Parker, senior vice president, Wells Fargo Equipment Finance.
It’s an interesting time in our industry with private equity firms investing in dealers and acquisitions occurring at a fast and furious pace. What’s your take on this latest flurry of acquisitions activity?
Buysse: We’ve seen similar events before, and it certainly is an exciting time with renewed energy and opportunity. We are well positioned through strong relationships with manufacturers, the consolidating companies and the nation’s best dealers.
Capparelli: I don’t see a slowdown in acquisition activity any time soon. In order to keep seeing growth in this market environment, office products enterprises need scale advantages and they need to move quickly into new business areas, both of which point to more acquisitions to come. Also, you’ve got a lot of stock on the market as the Boomer and Gen X principals are looking to cash out and retire. Or temporarily retire ““ a lot of these “retired” dealer principals still want to share knowledge and contribute, and some are already re-entering the industry following the expiration of their non-compete agreements. Their experience coupled with fresh ideas from rising management will combine to continue shaping the future of the industry.
Carollo: I view it as a natural progression, as it is happening in many other industries. First off, the industry should take comfort that PE firms are interested in this space and view it from a positive perspective for the future. Consolidation can result in beneficial change or can cause issues in an industry. We are watching the trends with a curious eye to where this leads. With that said, there has always been and still is a need for well-run regional independent companies. We saw similar trends in the past with Danka, IKON, and Global. Those historic trends did impact the industry but much still stayed the same.
D’Errico: Because we believe strongly in our value prop, we view any disruption as an opportunity. As long as we have a portfolio with any dealer entities involved in an acquisition, it’s a growth opportunity for us to align with them on their strategy.
Fisher: Staples buying Dex has certainly created a buzz in the industry! Many speculate what was behind this decision. While we understand it was an equity play to gain additional funds and accelerate acquisitions on a national level, one may also speculate a play into ecommerce. I believe the consolidation of the Global locations will open new opportunities for dealers in the geographic regions with no storefronts left. I believe it also presents opportunity for start-ups to enter regions they feel are being neglected. I am excited that GreatAmerica has seen a number of new dealerships emerge in the past year-and-a-half, and we look forward to seeing this trend continue. Other private equity players such a Visual Edge, UBEO, and Flexprint continue to be on aggressive growth paths and we are looking forward to seeing how it all plays out. This channel is very cyclical for sure.
Parker: It is a great opportunity for dealers who are looking to work with investors who understand the industry. We do not see any downside to companies looking to expand their footprints in the space.
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