M&A, Alarming Warning Sign for The Document Imaging Channel!

by ray stasieczko January 10, 2021

What are the 535, 2020 M&A's in the IT services sector telling the Print Services Sector?

The list of M&A activity and Private Equity investments within the IT Services Sector from January 2020 through December 2020 was unprecedented. Here's the list compiled by Channele2e 

https://www.channele2e.com/acquisitions/

The questions all my friends in the Document Imaging Channel must ask are tough.

Has Private Equity given up on the Document Imaging Channel?

Has the thinking that the document channel's large customer bases would provide great opportunities for diversified equipment and services finally been proven as fantasy?

Will investors believe that the IT Services Sector will capitalize on prints decline by delivering print equipment and its services closer to market realities then the document imaging channel.

Over the last year, the document imaging channel found itself for the first time in its history, seriously questioning the value of its core deliverable of print. That questioning was also apparent in private equity. However, more importantly, the industry's end-users are also questioning their future investments in print equipment.

2021 has started with even more M&A activity in the IT sector. So, far in just the first 10 days, there have been over 20. So, With all this M&A activity outside the document imaging channel. Why are the channel's actors not doing more to speed up their diversification into IT services? Or, why are those who have IT services still struggling with actually delivering these services in order to increase revenues and profits?

It seems as the dealers and the manufactures with direct operations are still print-focused and did not really use the last year to broaden their mindset to appreciate the realities of IT services enough to cause them the boldness in leadership needed to transition.

We still witness the industry not challenging itself outside print. Instead, the challenges of print have consumed the industry to double down on saving or advancing outdated strategies.

We are still witnessing the obsession to continue in outdated leasing and overselling A3 strategies. Still, we hear the insanity of home print management. Too many of the industry's advisors seem to be stuck in 2000 trying to prolong a print-focused outcome over a true broader technology services outcome for the end-users they serve.

Are the investors finally realizing that the IT services community is a better investment? Do the investors realize as print needs continue to decline, so will the value of the imaging channel's sales and service infrastructure.

We have all heard the saying as more and more try to exit, the lower the price paid. On the other hand, when the buyers are lining up to buy, the price goes up. What 2020 and now 2021 are screaming. Is the once perception of great diversification opportunities in print dealers' massive customer bases has proven to be not a reality?

Investors are flocking to those organizations at the heart of the customer's digitization, and those industries and organizations outside that digitization are not the best investment. Unfortunately, The investors have awakened to the reality that great relationships do not equate to an ability to transition.    

The channel has proven that building diversification business models to match the business models of overselling A3. Models based on the over selling of products instead of capturing services have not worked and never will.

The document imaging channel is not going to diversify just because of a relationship. Those organizations outside the core deliverable of print attempting to deliver through the channel. Must not allow their great intentions of helping the channel diversify to be hijacked by those from within the channel attempting to help the outsiders who believe relationships will guarantee their transition. This strategy has failed miserably over the last decade.

Dealers must listen to those who successfully delivered the diversification. Instead of those attempting to fit the diversified deliverable into the print services deliverable model, they must deliver the diversification as intended and stop trying to circumvent what others do successfully because it's more comfortable to remain fooled by those too afraid to challenge this insanity.  

My friends' your transition to IT services is not a suggestion from your customer base, your investors, and your balance sheet it's a demand. Those who continue ignoring all the indications of the rapid decline in the value of a print equipment and its services infrastructure will soon realize the value of what they spent their lives building is nowhere near as valuable as they perceived.

The document imaging channel can transition; it simply takes boldness and the ability to lead based on reality.

Transition is not automatic, it takes a deliberate process, and without discipline, in that process, it will not come.  

Those wishing to help the document imaging channel transition. Must stop allowing the channel's actors or print-focused consultants. To hijack your good intentions by substituting the harshness of the needed coaching with an appeasing approach unmeasured caused by the misunderstanding or an incompetence of the transition's realties.

Over the last decade, transition attempts hijacked by appeasers were somewhat hidden as print's core deliverable was still sufficient in concealing mismanagement. Obviously, with the recognition of prints decline, there's no more room to manage or receive consultation-based on appeasement.

In Closing: When investors believe what they hoped for is not a reality, they cash out. The print equipment and services industry has to diversify and quick.

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

If not already Let's connect here on Linkedin

Ray Stasieczko 

CEO/Founder TEASRA,The Innovation Channel and Host of The End of The Day With Ray! https://www.endofthedaywithray.com/

I welcome everyone to subscribe to my YouTube Channel https://www.youtube.com/channel/UCULKZDBCR1ozWXmu4Tob66A?view_as=subscriber 

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