Private Equity, The Imaging Channel, The Silence in the Storm

by ray stasieczko September 07, 2019

It Sure Is Quiet Out There! It almost seems as though the Imaging Channel has no hardship. It appears that everything is just fine. Who could have ever imagined that some of the mighty could fail? Who could have ever imagined that Private Equity would evacuate ahead of schedule? Who could have ever imagined that the glory of Managed Print Services would not be so glorious after all?

Just because things are quiet doesn't mean all is good. As the weather teaches us, there is the calm before the storm, and the storm is on the horizon. Over the next year as realities set in. The Imaging Channel will witness causes which hopefully will alarm its complacency. I am pretty sure most of the channel's leaders are logical and realize the feeding frenzy on the bull market of buying growth in a declining deliverable had to come to bear sooner than later.

Soon the need for scrutiny to the realities of the market will reach the ears, the minds and the hearts of Private Equity, venture capital, and yes even the independent dealer's banker. I recently went back and read some articles regarding the reasons why Private Equity decided to invest in a declining market. It seems a few bought into the hype of the expected growth of Managed Print Services. As these investors are now discovering every printer in the world will continue to print less. So, regardless of the number of devices the devices out-put will, in fact, continue declining.

Will more Private Equity look to exit ahead of schedule?  

As Private Equity exits the value for those remaining will continue falling and of course, the more evacuating at the same time, the faster the falling of value. Private Equity really needs to evaluate what its end game is. I believe five or six years ago things were less clarified then they are today. Those grand visions of an industry as presented in 2015 of what 2020 would be. Are not aligning as thought and the realities of the actual market are now concerning Private Equity, and many of the industry's actors.

Who will buy from Private Equity? It seems that most of the Private Equity roll-ups are intending to sell to another Private Equity Firm. Will manufactures buy these roll-ups? As Ricoh clearly showed they have no intention of buying dealer distribution. Our friends at Sharp are currently buying dealers they obviously know a strategy Ricoh missed. Xerox is cleaning up their distribution, I don't see Xerox buying more distribution outside of something very strategic. Oh, HP well, they will more than likely buy Xerox not a dealer roll-up. Maybe it's a DEX Imaging strategy in their sale to Staples Private Equity hopes for.

So, this game of Private Equity musical chairs could prove fatal. As we are all currently witnessing, a couple of organizations in the industry struggling to sell and buried in debt. Their outcomes could be a pretty good barometer of what the future might bear. 

Somewhat troublesome is when we listen to some of the visions of today describing 2025, they still see more of the same. My friends, the industry must replace their memories with their imaginations as they look toward the future. The industry must have the ability to think and respond to how the market realities are affecting the current circumstances of the print equipment and services deliverable. Those who can do this will, prosper. 

The struggle will be building a sales engine which aligns with the realities of the value propositions of its customers. Today there is a massive percentage of customers whom I believe are misunderstood and out of alignment with today's sales strategies; strategies which, for the most part, have not changed in decades. The Imaging Channel must modernize its approach to the market. Since the industry's birth, they continue to sell, communicate, and service for the most part as they always have. All while the customers they sell, communicate to, and service have changed and in some cases drastically in their appreciation of the print equipment and services deliverable.

As the world prints, less the resellers must diversify, and if not, they must without a doubt have a plan to cut cost dramatically and deliver equipment and its services through an innovative approach. The industry must take the A4 opportunities seriously and develop a strategic A4 deliverable. The industry must respond to the data and stop insisting that their past can continue uninterrupted. The obsessions of A3 over the realities of A4 will be costly to those unresponsive to this shift in equipment realities. 

It's time to shift shift the thinking and align with realities 

Is it now time for the industry to stop getting in debt to buy growth which is declining? Yes, Instead, the industry should invest in the ability to deliver and service in a disruptive means. Invest in leadership executives from outside the industry who can inject unbiased innovation, invest in e-commerce, and updated technologies more in line with today's commerce realities. Many in the Imaging Channel are still using ERP systems-built decades ago which are useless to innovation, and many are not using data to clearly define the facts of not only their external customers their internal customers as well. 

My friends' none of this will be easy. However, if the industry works together and works toward progress, all things possible become probable. No industry or its leaders want to face the wrath of progress. Instead, they strive to be the wrath of progress to those competitors who ignored market realities or misinterpreted the silence in the storm.  

 One thing we all know is this.

 "Status Quo is the killer of all that will be invented."

Ray Stasieczko, Send an invite if you wish to connect also I welcome you to subscribe to my YouTube Channel here's the link. https://www.youtube.com/channel/UCULKZDBCR1ozWXmu4Tob66A?view_as=subscriber

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