Horace Greeley was a 19th century editor credited with changing the direction of American journalism, and he coined the phrase “Go West, young man, and grow up with the country.” Marco, under the leadership of CEO Jeff Gau, put a new turn on that phrase by going east with the recent acquisition of Phillips Office Solutions. With 10 offices in Pennsylvania and Maryland, the Phillips Office Solutions acquisition establishes Marco’s footing on the East Coast in some of the most populous and active business areas of the country.

Phillips Office Solutions is a leading provider of printers, copiers, production print, wide format print, and document management solutions in Pennsylvania and Maryland. They also offer services including managed network services, MPS, document storage services, shredding services and document conversion services. Founded in 1940, the Phillips headquarters is in Middletown, Pennsylvania. Other offices in Pennsylvania include York, Lancaster, Reading, Williamsport, Danville, State College and Hazelton. Offices in Maryland are in Baltimore and Hagerstown. David and Peter Phillips, co-owners, plan to retire and sold their Phillips Workplace Interiors business before the acquisition.

With 2018 revenue expected to be about $38 million and 140 employees, Phillips is the largest acquisition by Marco to date. This represents an approximate 10 percent increase in revenheadcountd count for Marco. Adding Phillips, Marco expects to do more than $400 million in revenue this year and now has approximately 1,400 employees.

This is the fifth acquisition this year for Marco, which now has 61 offices with 1,400 employees across 11 states — Minnesota, North and South Dakota, Nebraska, Iowa, Missouri, Wisconsin, Michigan, Pennsylvania and Maryland. In an interview with the Central Penn Business Journal, Jeff Gau of Marco said “Marco intends to remain a strategic buyer in the document management industry and will use the Phillips deal as a springboard for future East Coast acquisitions. We will expand out there through Phillips.”

Marco has been focused on a growth strategy that is calculating on about half the growth coming from organic market growth and the other half coming from strategic acquisitions such as Phillips. This has returned roughly a 20 percent CAGR for Marco over the last 10 years, as reported in the November 13 Saint Cloud Times. Since 2005 the company has made more than 40 acquisitions with 15 coming since Norwest Equity Partners (NEP) purchased Marco in 2016.

According to Gau, in his November 8 company blog, the Phillips acquisition has led to some leadership structure changes. Marco will establish “regional presidents” in their major hubs with former Phillips president Bill Shuey to be the East Coast Regional President.

Citing cultural similarities with Phillips, Gau said, “We share so many of the same core values. We look forward to building upon what the Phillips family has created and bring more opportunities to the clients, employees and communities they serve on the East Coast.” Peter Phillips, CEO and owner of Phillips Office Solutions, stated, “We know Marco will be good stewards of our family legacy going forward and will serve our document management customers, team members and communities really well.”

Our take

This acquisition brings 4,000 East Coast customers to Marco. Phillips has been a traditional equipment and suppliers provider, and while they also provide IT and other services, that business only accounts for about 5 percent of total revenue. Marco has identified itself as “an IT services company that also sells copiers and printers” and the general acquisition strategy has been to buy a traditional copier business and add IT services. Gau has been clear that growth is within IT services since the printer/copier industry is mature. The opportunity to expand services in current customers as well as organically grow by adding new print and IT services customers should bring continued growth and a good ROI to Marco.

Establishing this beachhead on the East Coast is significant for Marco. As they work through this new addition, and as their new leadership structure gels, it should not be unexpected to see additional Marco action on this coast. Additionally, Gau has said that if a deal makes financial and logistical sense Marco is open to opportunities anywhere. Marco has considered Texas and points west, so perhaps they will ultimately follow Mr. Greeley’s advice. It’s clear they have their eye on a much larger prize, as Gau has called the Phillips Office Solutions acquisition “ … the next phase of our (Marco’s) national expansion.”

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Patricia Ames
Patricia Ames is senior analyst for BPO Media, which publishes The Imaging Channel and Workflow magazines. As a market analyst and industry consultant, Ames has worked for prominent consulting firms including KPMG and has more than 10 years experience in the imaging industry covering technology and business sectors. Ames has lived and worked in the United States, Southeast Asia and Europe and enjoys being a part of a global industry and community.
Patricia Ames

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Patricia Ames

Patricia Ames

Patricia Ames is senior analyst for BPO Media, which publishes The Imaging Channel and Workflow magazines. As a market analyst and industry consultant, Ames has worked for prominent consulting firms including KPMG and has more than 10 years experience in the imaging industry covering technology and business sectors. Ames has lived and worked in the United States, Southeast Asia and Europe and enjoys being a part of a global industry and community.