Konica Minolta Business Solutions U.S.A., Inc. announced that it has acquired CopySource Inc., a business solutions dealership headquartered in Coral Springs, Fla., to increase Konica Minolta’s reach in the southeast Florida.
In addition to the announcement, Florida has been a hotbed of acquisitions in the past 24 months from OEMs, Independent Dealers and IT firms all positioning for growth.
There are a number of business motives as to why acquisitions are exercised as a business line of attack by these individual corporations.
- Consolidate to remove excess capacity from the industry
- Accelerate market access
- Acquire skills or technologies faster or at lower cost
- Improve the company’s performance
KMBS’ company performance is undoubtedly not the sole motivation; total company revenue was up 6% for FY2012 (which ended in March), hardware revenue up 8%, and 9% more units than the previous year. Their two biggest growth numbers were software solutions up 44% and IT services up 59%. This is clearly a move that is one part defensive and one part acceleration of market access to augment their presence in South Florida and Florida in general. Of note is the fact that dealers accounted for 52% of units KMBS sold in FY12 (with 48% going through Konica Minolta branches). Florida is one of the most competitive markets in the United States; the move to acquire CopySource begs two questions;
- Was this move in part due to the under-performance of the KMBS Florida direct branch sales and service operations?
- Why acquire a company where one of your largest distributors (if not the largest) in the country Dex Imaging, $140M+ in annual revenues, already has 14 locations in the State and has coverage in that very same market?
Don’t interpret this acquisition as an OEM buying a distressed dealership; Owners, Tim and Kim Marshall are good business people with stellar reputations in the South Florida Market. CopySource has been recognized as an Inc. 5000 Company for two consecutive years; their organic growth of 136% from $5.9M in annual revenues in 2009 to $13.6M in annual revenues at the end of 2012, and with employee growth from 26 employees to 52 in that same period; concrete proof that KMBS is acquiring a solid company.
In the KMBS press release, Rick Taylor states “We are clearly set on a course to implement a growth strategy that includes organic growth, value-based partnerships with dealer partners, and acquisitions where there is strong value for both the customer and the company. CopySource’s reputation as a leading business solutions company in the region, along with its stellar level of service, is proof enough of the company’s exceptional management team, technologies, services and expertise.”
This collision course of the IT space with independent office equipment dealers and the trend of industry consolidation will continue, the markets may be performing well, but gross domestic product (GDP) is essentially flat, so 2014 will continue to be one of increased disruption as OEMs, Independent Dealers, IT firms all jockey for position. The industry’s future will depend on companies’ ability to innovate, create, and reinvent the way it does business.