One of the more interesting stories in the industry lately involves the influx of new capital from private equity and venture capital groups. Investments have followed a rainbow of different models, but the impact is undeniable. Capital spurs growth and growth is becoming more and more elusive in the channel. FlexPrint has been at this game longer than most, and one of the recent dealerships to join the Flex Technology Group team are the MPS specialists at Flo-Tech out of New England. I had the opportunity to sit down with Leo Bonetti, founder and chairman emeritus of Flo-Tech, to talk more about why this was a good move for them specifically and how they see the channel evolving going forward.
Flo-Tech is known to be a very successful dealership — what are you hoping to gain by joining up with the Flex Technology Group?
Primarily, I wanted to ensure a good future for the employees of Flo-Tech. Together we built a great company that was a pioneer in the MPS space and that has always been a leader in MPS, but I never really focused on succession planning. My children are college age and going in their own career directions and they weren’t going to be involved in Flo-Tech. I enjoy working and the industry is a lot of fun for me — you could say I have toner in my veins. The Flex Technology Group provided me a partnership approach that provided guidance on succession planning as well as an ownership interest in the parent company so that I had the ability to provide input with financial upside in the company. Now I have the benefit of working with a group of like-minded leaders that are all working together to ensure we provide a great environment to our employees so that they can serve our customers, and in the long run all of the partners should do OK with their financial investment in the company.
What do you see as some of the biggest challenges for dealers right now?
The biggest challenges are complacency and lack of planning.
I believe there is a great deal of opportunity for dealers today if they take the time to analyze their situations and plan for the future. If the dealer doesn’t have a clear succession plan in place and wants to sell there are multiple buyers that follow three strategies. Most buyers are really focused on MIF acquisition and simply integrate you into their company as fast as possible. If you are not worried about your legacy and felt confident your employees could find other jobs if they needed to, and you instead wanted to maximize what you are paid for your company, this is the way to go. These acquirers can pay more because they know they’ll strip out costs rapidly and get a quick payback on their investment.
If you want some autonomy and you want to retain your legacy and provide a career for your employees, where most midsized to large dealers fall, there are only a few acquirers that provide that model. Flex Technology Group is unique in that they allow the stockholders to roll funds into the parent company and continue to see appreciation on their investment. I went through a lot of diligence before choosing to join them and to the best of my knowledge, we are the only company that provides the ability to be a true shareholder in the parent.
If you want to remain independent and you feel as if you have the management talent in place to run for the next 10 to 20 years [the minimum timeline I’d have if I wasn’t considering selling], there is significant opportunity in market share gains, product extensions and adjacent markets. Most dealers have sub 10 percent market share, and many have sub 5 percent, so even with images declining there’s massive opportunity to grow revenue and profits. There are also opportunities in production print, MPS and the associated software such as document management, variable data and print management. MNS is also a great market for those dealers calling on smaller companies assuming they do the proper planning. You will see continued consolidation, but this industry still has legs that will carry it for a long time.
What advice would you give to people working in dealerships that are in their late 20s or in their 30s?
Work smart, constantly be learning and improving, get a mentor and don’t get too stuck in the old ways of doing business in the industry. There is a great deal of opportunity in this industry, so identify and seize that opportunity.
Do you think print in the office is dying?
From the day we’re born we’re all dying, and every industry goes through that same lifecycle. But print has a long life ahead and I doubt that many of your readers will outlast print in the office. We are not an industry that will undergo massive and immediate disruption.
What is the most interesting office technology out there right now, in your opinion?
Office technology is a broad term and there are some wonderful cloud-based collaboration and messaging tools as well as tools that will help with email, which is really becoming unmanageable, but specifically in this channel I find industrial print to be an area that will have great growth opportunities for dealers. I don’t think it’s mature enough to get into today, but I think within the next few years that will be a great growth opportunity for dealers.
Flo-Tech is a specialist in managed print — do you feel like the market is saturated? If not, where do you see the biggest opportunities?
Not even close to being saturated. Candidly, I believe the copier dealer community has done a poor job adapting to an MPS strategy, so that leaves a lot of opportunity in the midmarket and you wouldn’t even use all your fingers to count the dealers that sell MPS into the enterprise space.
The biggest opportunity has been and remains helping large organizations manage a diverse fleet of output devices.
What are you most excited about right now?
It is exciting to be part of the Flex Technology Group executive team. Even though we generate over $250 million in revenue, the enthusiasm and excitement makes it feel like a startup organization. Each core company operation is run independently but we share ideas across all companies to help each of us improve our results and to create and provide more opportunity for our employees. I love that I get the information and support and I have to admit that the competitiveness of being ranked against the other companies in the group makes me want to be at the top of the charts. It’s what many companies get from peer groups, only this is on steroids because each of you are stockholders in the company, so you have a shared vested interest.
Want to talk this over? Leo Bonetti can be reached at 1-860-209-6893