CompuCom for Sale: MSP Acquired Before 2022?

Office Depot parent ODP is striving to sell the CompuCom IT services business before the end of 2021, ODP Executive VP David Bleisch told Wall Street analysts during an earnings call today.

Bleisch stated:

“With respect to CompuCom, the previously disclosed sale process continues to progress. We are working toward announcing the transaction before the end of the year, but there can be no assurance that we will do so. We do not intend to provide any further details on this process until it is completed.”

The CompuCom sale process has been a lengthy one. ODP has been trying to sell off CompuCom  since late 2020.

Office Depot and CompuCom: Inconsistent MSP Performance

Office Depot acquired CompuCom for $1 billion — a lofty 10 times earnings at the time— in October 2017. The IT services business unit has generated mixed performance under ODP’s ownership.

CompuCom President Mick Slattery described key business progress to ChannelE2E in June 2020. However, the business struggled on some fronts during the pandemic. Also, a malware attack against CompuCom triggered further revenue and profit challenges for the MSP.

Fast forward to present day. MSP valuations are at record highs — with some businesses fetching annual EBITDA multiples of 15X or more. Still, those valuations are for healthy, fast-growth MSPs that have frothy EBITDA margins.

CompuCom Business Performance, Private Equity Buyers?

Less is known about the current state of CompuCom’s business. Last we heard,  the MSP’s revenues grew 4 percent in Q2 of 2021 v. Q2 of 2020 — not all that great, considering the MSP market is growing roughly 7 to 10 percent per year (based on various market segments), and the MSSP market is enjoying double-digit percentage growth rates.

Still, CompuCom has scale and a large installed base. At the right valuation, the MSP could be a tempting target for a private equity firm seeking an IT consulting and IT services platform play, ChannelE2E believes.

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