Only the Investors Win!June 18, 2014
Yet another merger and acquisition as Epicor’s equity owners seek a buyer. I thought the .com bubble was over! Just since Savance has actively pursued Array customers, the company has been known as Trade Service Systems, TradePower, Activant, Epicor and has been owned by so many private equity firms that even employees can’t figure out who’s cutting their paycheck this week. I remember when I sat down with Dean Jester, president of TradePower, in his Yardley, PA office planning how our sleek, fully-integrated front-end system could solve their Array for Windows and DB2 blunder and give their user base the kind of system they’ve been asking for. He brought in Mike Wentz and introduced a few other key folks to positively kick off the new relationship. Then a week or so later, it all came to a screeching halt. Activant purchased TradePower, and everything across the board was put on hold.
For the end user, a merger or acquisition sounds appealing at first: larger company should mean more investment in the product for development and support, and maybe a larger user base down the road. But history tells a different story. The real statistics show companies like Epicor abandoning product lines, losing employees due to cuts and low morale, losing user base due to uncertainty and abandonment, severely lacking in support, stopping all product development during a long transitional period, and completely shifting primary industry focus. So how does any of this help their clients and users? It doesn’t. In the end, the focus is on making money for investors.
Take for example Epicor. While their user base declines, customers complain of poor support, product development stays stagnant, they take on over 700 million in debt to fund dividends to private equity shareholders. For the distributor who fights to beat out the Goliaths like Grainger and even Home Depot, Lowes, and Menards, if you’re going to take on debt, it’s not to reward the owners, it’s to improve operations and service levels, increase inventory, and market better. Your goal is to increase sales and profits by offering superior product, superior service, and at a fair price. Why should they not hold themselves to the same standards? Why? Because they are motivated by other factors that differ from a privately or family-owned business. They’re not in it for the passion they have for the industry or to fulfill their dream or their father’s or father’s father’s dream. They don’t sit up at night thinking about how they can service their customers better. The decision makers are not down in the trenches day-to-day. They’re sitting in comfy offices making decisions with one priority in mind – how to APPEAR profitable and attractive. The buyer’s goal – to buy marketshare or to dress it up a little more, and flip it once again. If it’s the former, their intentions are to force you to move to their “leading” platform, that probably isn’t leading and probably does not align with your master plans nor your goals or objectives. But they’ll keep pressuring you by cutting support, rising prices annually, forcing you to use 3rd party support, stopping development, and cutting you off from contact until you switch or leave. It really saddens me that the business world has evolved into a marketplace of mergers and acquisitions dictating the lifecycle of an entire product line or vision once held by its creator.
Now contrast that with Savance. Privately held since 1998. Privately funded solely by active owners. Founder, me, Steve Bardocz, still steering the ship with the same vision for over 15+ years. The original product, started all those years ago, still the same product we actively develop to this day. The service, the same know-you-by-name service we founded the company on. The technology, the same leading-edge, user-friendly technology initiative we stood for when we released our first version. Where are we going? The same direction as we always have. We are reinvesting every dollar we make right back into a better product and our great staff so we can continue to offer the same level of service and support. So when you hear that your company’s business system vendor is up for sale again and you feel uncertain about the future, look to Savance. Let us earn your trust. Let us know you by first name. Let us care whether you’re happy and whether your business is succeeding. Let us listen to your feedback and incorporate your ideas into the product. Give us an opportunity to earn your business for life!
Steve Bardocz, Founder and CEO, Savance