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Does the rise of mega dealers and private equity-backed dealers spell doom for the dealer channel as we know it?
I recall my colleague Andy Slawetsky telling me a few years ago that whenever he posted news of an acquisition in his What’s Happening newsletter the clicks would go through the roof. We’ve seen similar traction with our posts regarding acquisitions as well. Readers are hungry for acquisition news. Fortunately, they rarely have to wait long to satisfy that hunger.
Some believe the recent spate of acquisitions activity will slow down in the coming year. A reliable source recently told Frank Cannata that he expects to see fewer acquisitions in 2020 because of a lack of suitable acquisition targets and because of dealers who have overvalued their dealerships. Not that either of those reasons has stopped certain entities from acquiring in the past.
But what if things don’t slow down? What if this industry continues to eat its young, or in most cases, its old? What will be left?
Will the 1% rule the channel? You know, DEX Imaging Systems (Staples), Flex Technology Group (FTG), Marco, POA, UBEO, Visual Edge. We could easily expand that list to include other large entities such as Atlantic, Tomorrow’s Office, ImageNet Consulting, RJ Young, and maybe even Kelley Imaging Systems who acquired like crazy in 2019. I’m sure I failed to mention other large and growing dealers, but this isn’t meant to be a comprehensive list, only a representative one.
A harbinger of the future is that some dealers referenced above are not just expanding regionally but nationally. FTG is an excellent example, but you can’t overlook the fact that Marco has expanded into the Northeast with the acquisition of Image Systems for Business in Somerset, NJ. And don’t be surprised to see the DEX Imaging Systems footprint expand nationally either.
If this continues, what if the big dealers are the only ones left?
One of the best ways to tick off smaller dealers is to say their days are numbered. I don’t think so, but what if?
If that’s the case then this publication and the remaining OEMs and other vendors and suppliers serving the dealer channel will be catering to 30, 40, 50, 100—or you pick a number—of the large entities that remain.
That could be depressing unless you’re one of the top dogs remaining.
However, by the time we reach that “What if” scenario most of us will be gone and it will be a new reality, a reality that few will question since few will remember the way we were.
For the record, this “What if” moment was inspired by my favorite movie channel, www.criterionhannel.com, which announced a series of classic and not-so-classic science fiction films that will be appearing on the channel throughout the month of January.
That’s enough from me for now. Time to watch “Logan’s Run.”
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