Ray Morgan Company and UBEO Business Services Merge Under Private Equity Umbrella

Monday brought with it some more channel-related M&A activity as UBEO Business Services announced a merger with Ray Morgan Company (RMC). The combined businesses will represent more than 700 employees and an installed base of 135,000 machines in field (MIF). We were able to speak with Ray Morgan Executive Vice President Chris Scarff this morning to get additional details on the merger. Ray Morgan has been growing rapidly and is projected to have about $120 million in sales this year. Forging an alliance with UBEO will allow RMC to focus aggressively on acquisitions in both the copier and IT channels.

UBEO is a portfolio company of private equity firm Sentinel Capital Partners based in Texas, offering business technology services in both Texas and Louisiana, while California-based RMC provides office technology solutions in California and Nevada. Ray Morgan will maintain its headquarters in California, with Greg Martin remaining as president. Current UBEO CEO Jim Sheffield will retain his title.

For Ray Morgan, managed IT services are a big part of the future of growth — an idea we frequently see espoused as one of the key areas in which dealers can grow, but often have difficulty pulling off. Ray Morgan has been doing it successfully according to Scarff, who spearheads the IT division at RMC. Scarff pointed out that managed IT is their fastest growing segment during our visit of the Chico, California headquarters earlier this year.

The path is not without struggles, however, and dealers need the resources and investment to be successful. In this interview with Greg Martin earlier this year, he told us he was “fired up” about solutions, but acknowledged that the path to success was a long, painful and expensive one. “It took a while,” he said, but noted that over the years the company had seen some real positive growth and results in their managed IT ventures.

In that same interview, Martin noted that RMC was looking to continue its growth organically and through acquisitions — clearly a bit of foreshadowing.

UBEO has a strong managed IT offering, and the combination of the two should go a long way toward helping continue the growth and profit from both ends. For larger, more evolved dealers like Ray Morgan and UBEO — progressive companies that have already expanded beyond selling the box — competitive partnerships such as this one are an ideal strategy for expanding both geographically and vertically into adjacent markets.  The companies’ strength in managed IT will serve them well across their new geographical coverage area, which now covers four states. Meanwhile, their combined offerings will expand the products and services available to those areas — both are multi-line dealers and the combined 135,000 MIF appear to cover basically every major OEM; and the two combine to partner with numerous software and solutions providers as well. Ray Morgan lists a solutions portfolio that includes Canon, Ricoh, HP, OCE, Laserfiche, Crexendo, Uniflow, Nuance, PaperCut, XMedius, Samsung and Kyocera; UBEO’s website includes most of these and several more.

Clearly, this new arrangement will provide additional capital for RMC to become an aggressive player in the acquisition game, looking to add additional dealerships and IT services providers to their growing portfolio. There may be quite a few dealers in the channel looking at this announcement and evaluating their future.  With so much consolidation in the OEM world and the rise of the megadealer, success in the industry is often dictated by banding together to create the best possible combination of services, geography and resources.

M&A is a constantly increasing activity in the channel, and announcements like today’s are rarely greeted with surprise anymore, but rather with interest. What strengths do the companies involved bring to the table, what are the complementary offerings and where will the newly merged company differentiate? Ray Morgan and UBEO appear to be very much aligned and the focus on managed IT, solutions and customer service should prove to be a great entry into its newly expanded geographical footprint.

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