Wow!

Never saw this coming. It looked as though ComDoc was positioning itself to sell, however, I did not see it being Global. This is huge for us in the Northeast, specifically, PA and OH.

Ricoh's largest independent dealer....

And the fallout continues....
I was flabergasted when Mike called me this AM!! Nothing surprises me anymore! Oh, thats got to hurt Ricoh big time. But how mucg business can Global and Xerox buy.

This is not good news for Xerox, you've read the press releases and they have laid off 3,000 workers (i think thats correct) and then one of their core companies spends millions an an acquisition. I like to see the financials of this deal and see if any money came from Xerox, they could end up with alot of egg on their facec.

Art
TAMPA, Fla., Jan 30, 2009 (BUSINESS WIRE) -- Fifth graph, first sentence should read: Subject to customary closing conditions, the acquisition is expected to be completed in the first quarter of 2009. (sted Subject to customary closing conditions, the acquisition is expected to be completed in the first quarter of 2008.)
The corrected release reads:
GLOBAL IMAGING ANNOUNCES AGREEMENT TO ACQUIRE COMDOC
Global Imaging Systems, Inc., a Xerox company (XRX:Xerox Corporation
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Last: 6.77-0.20-2.87%

2:08pm 01/30/2009

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XRX 6.77, -0.20, -2.9%) , today announced a definitive agreement to acquire ComDoc, Inc. This acquisition will expand Global Imaging's coverage into four states offering them access to more than 14,000 new customers.
One of the larger independent dealers in the U.S., ComDoc, sells products from various suppliers, none of which today include Xerox. In addition to its existing offerings, ComDoc will start selling Xerox document management products following the close of the acquisition.
Comdoc, founded and headquartered in Akron, Ohio in 1955, has offices in Cincinnati, Cleveland, Columbus, Dayton and Youngstown, Ohio; Pittsburgh, Pa.; Albany, Buffalo and Syracuse, N.Y.; and Fairmont, W. Va.
This acquisition will continue Global Imaging's expansion of a national network of office technology suppliers to serve its growing base of small and mid-size businesses.
Subject to customary closing conditions, the acquisition is expected to be completed in the first quarter of 2009. Terms of the deal have not been disclosed.
About Global Imaging Systems
Global Imaging Systems operates through small and mid-sized businesses with regional core companies in the U.S. that sell and service document management systems such as printers, copiers and multifunction devices; network integration services; and electronic presentation systems. As an office technology dealer, Global sells products from various suppliers including Xerox, Sharp, Konica Minolta and Kyocera Mita. Xerox acquired Global Imaging in 2007 and operates it as a wholly owned subsidiary within Xerox's North American operations.
Media Contact:
Carl Langsenkamp, Xerox Corporation, +1-585-423-5782, carl.langsenkamp@xerox.com
Note: For more information on Xerox, visit http://www.xerox.com. For open commentary and industry perspectives, visit http://www.xerox.com/blogs or http://www.xerox.com/podcasts.
Xerox(R), the Xerox wordmark and the spherical connection symbol are trademarks of Xerox Corporation in the United States and/or other countries.
SOURCE: Xerox Corporation
Xerox Corporation
Media Contact:
Carl Langsenkamp,+1-585-423-5782
carl.langsenkamp@xerox.com
Friday, January 30, 2009

A Xerox Company Agrees to Buy Comdoc

Whoa! I had the call at 8:00am this morning and I was flabbergasted. My first thoughts was of this release; Xerox has become the latest technology heavyweight to issue a major round of layoffs.The company revealed on Thursday that the sagging economy has forced a reorganisation plan which could see some 3,000 jobs eliminated. Such a cut would remove five per cent of Xerox's total workforce.

Global Imaging Systems, Inc. is owned by Xerox, Global has agreed to buy Comdoc.

For the sake of almost 3,000 people who lost their jobs, was this a good move by a Xerox owned company? Heck in Rochester the other day, Xerox laid off 40% go here for rest of blog
quote:
Summary: This was one of Ricoh's largest dealers in the North East, another hit for them and probably all the more reason to keep expanding direct. Canon? Where were they, you haven't heard squat from them since Ricoh bought IKON except for a purchase of NewCal in California.


Canon seems to be going the route of signing up new dealers up to this point, which is likely being done quietly.

This past year and 1/2 has been crazy....
and the beat goes on...

The industry is going to continue to contract and over the next 3-5 years more and more dealers are going to be gobbled up by the manufacturers. In 10 years I doubt there will be many dealers left; it's a matter of economics. Frankly, I've worked for both the dealership and manufacturers side; it's been my experience that dealers either can't expend the resources to support their business or they don't want to spend the money necessary to provide the resources for their sales teams. Because of that I feel the manufacturers see no other way to capture as many clicks as possible then to be the first source for the client. Technology has demanded a new business model that, in my opinion, dealers are willing to invest in.
Ths buying of dealers sets an aweful precedent for that dealers that do not get purchased.

Think about trying to secure and account and the CEO, CFO or owner asks this question to the dealer sales person.

How do I know that your company will not be bought out by or sold? I for one, would feel more comfortable dealing direct, knowing that my product will always be serviced no matter what happens.
Not to insult my Ricoh sales brethren but as a longtime ComDoc employee/owner the overwhelming majority of the people here look at this as a very, very positive thing. Things had not been so peachy since the Ikon aquisition with a general feeling of being the redheaded step child in regards to support (and possibly pricing) from Ricoh. Just the thought of not having to deal with the RMAP process gets me pretty excited. Only time will tell.
I will say that it was amazing how little time it took for our competitors to hit the phones to our currents and start the negative fear mongering. Oh well, that's the nature of the beast. A few years from now when the dealer network is nearly extinct we'll all look back at this and laugh.
I don't think it's appropriate to view the ComDoc acquisition as somehow counter to the spirit of the 3,000 jobs eliminated by Xerox.

Xerox is prudent to eliminate positions that efficiency has made unnecessary, and to spend funds to grow the business by acquisition.

I cut the grass in my front yard and water the vegetables in the back, but that is not an inconsistent strategy.
quote:
Originally posted by JT:
I will say that it was amazing how little time it took for our competitors to hit the phones to our currents and start the negative fear mongering.


Well, that's what I'd be doing. Are you happy with your current equipment? You know (Insert Dealer name here) is a (insert manufacturer name here) company now, they won't be selling or supporting that anymore. They'll probably try to move you into one of their machines when your contract is up or they can't service this one anymore.

Yup, well, here's my card, give me a call if you have any problems, I'm here to help Wink
quote:
I don't think it's appropriate to view the ComDoc acquisition as somehow counter to the spirit of the 3,000 jobs eliminated by Xerox.


Well. what if Ricoh laid off 3,000 workers and and IKON (a Ricoh company) went out and bought a 150 million dealer?
Have you ever seen a sales rep with a great client base leave for what they believe is a better deal, they generally feel that they have such a great customer base that they will all follow them to wherever they go. But they do not all follow. Customers work with companies as a whole, so they do not really care what they sell as long as they continue to take care of them and keep them happy in the relationship. Now I am sure that everyone can point out end users that have left to go to other dealers, but in the scope of a business there are not that many.
I cannot disagree more. I had 90+% come with me when I moved because being a great help hide the issues of the dealership. When I left it all came out. Most people would rather work with someone who will go to bat for them and have someone to call rather than deal with a no-name at a company.

Just my $.02.
"Well. what if Ricoh laid off 3,000 workers and and IKON (a Ricoh company) went out and bought a 150 million dealer?"

That would be similar. Ricoh, in their judgment, would have identified 3,000 employees who represented more cost than value.

And Ikon would have found a $150M dealer it could buy for less than it's future value.

It would represent at best two independent good business decisions, and at worst a trade-off... let's cut 3,000 overhead positions and add $150MM in revenue...
I could not disagree more also. Being in this business for over 28 years, I have more to another dealer an most of my customers stay with me. Customer buy from the sales person more than the dealer they work for.
Most owners will disagree with that.
quote:
Global operates as wholly own sub of Xerox and has been buying well run dealerships before Xerox and will continue to aquire dealerships if it makes good business sense.

The layoffs and the purchase are mutually exclusive


I don't agree, being that I find it hard to believe that Xerox never new they were overstaffed and had off lay off 3,000 workers. The workers were laid off in order to reduce the bottom line, increase stock value. Xerox will suffer from now being understaffed.

What will be paid for Comdoc??? 50 million, 100 million???
quote:
Well. what if Ricoh laid off 3,000 workers and and IKON (a Ricoh company) went out and bought a 150 million dealer?


It is fact that as Ricoh did indeed lay off employees, they went out and purchased IKON.

Also, now that Ricoh lost COMDOC, additional layoffs are certain.
"It is fact that as Ricoh did indeed lay off employees, they went out and purchased IKON."

Yes, but which logical fallacy is occuring? Is it post hoc, where we falsely assume that because B followed A, A must have caused B, or is it Joint Effect, where B is held to have been caused by A when in fact A and B were the joint effects of another cause?

If Xerox had 3,000 ineffective workers, and it's hard to imagine a Fortune 500 company that doesn't, then the layoffs were appropriate. If ComDoc was available at a price that would allow it to deliver an above market rate of return, then the purchase was appropriate.

Paranoia, however, will cause us to embrace the fallacies...
quote:
"It is fact that as Ricoh did indeed lay off employees, they went out and purchased IKON."


Well, almost right and proves my point, that the money came from the manufacturer and not the subsiderary (I know I butchered that). But, Ricoh did not lay off three thousand workers in order to do the Ikon deal.

The point is the economy is a tough issue right now, if the pockets run that deep at Xerox, I think they could have held on the employees and made the purchase!

I'm more concerned about the 3,000 people that lost their jobs. I quess that's where they found the 200 million or so to buy Comdoc. I'd love to see the financials on this one.
quote:
Yes, but which logical fallacy is occuring? Is it post hoc, where we falsely assume that because B followed A, A must have caused B, or is it Joint Effect, where B is held to have been caused by A when in fact A and B were the joint effects of another cause?


I failed too! Smile
Geez, what's with old dog copier guys and Algebra - took it twice in High School and passed it once then had to pass it again in college and barely passed. At RxR crossings I break out in a cold sweat waiting for Train A which left Peoria at 25 mph heading east and Train B which left Detroit heading west at 35 mph to collide 'cause I can't figure out where they'll crash . . .
quote:
Originally posted by JasonR:
quote:
Originally posted by Art Post:
What will be paid for Comdoc??? 50 million, 100 million???


It will be much more than that, they have annual revenue of $125 million last I heard. Going price is (depends upon the situation) a few times annual revenue.

What were IKON's annual revenues and what did Ricoh pay? Much less...
quote:
Originally posted by Laxfan25:
What were IKON's annual revenues and what did Ricoh pay? Much less...


The difference there is that Ricoh was a publicly traded company. Their stock was in the can, so anyone with the cash could walk up and buy controlling interest for X (the price of the stock) times Y (total number of shares).

IKON basically had no choice at that point.

COMDOC, on the other had, was NOT in the can, was NOT losing money every quarter, etc. Plus, they were owned by the employees who had to vote to approve the purchase (meaning they could say no if they didn't like the $$).
quote:
I've heard the sale price should be about 5 times earnings


When a dealer is purchasing a dealer, this is the general guideline. Ignoring cost of funds, the company I buy will pay for itself in five years if you follow this model. Sooner if you improve results after buying the company.

BUT.

When a manufacturer buys, this goes out the window. If COMDOC was a $150M company, doing $75M in equipment sales with Ricoh, Xerox just bought a $75M sales gain along with the manufacturer margins that go with those sales.

So every year they get the $15M we think they are already making, plus perhaps $20M in manufacturer GP by selling Xerox product that would not otherwise be sold, or $35M per year. Five times $35M is $165M or 1.1 times revenue.

I'll bet it went for between 1.0 and 1.5 times revenue.

Will we ever know?
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[b]How much did Global a Xerox company pay for Comdoc[/b]

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