As Office Depot's core business continues to weaken, the big box retailer is pushing hard in new directions. The latest example: Office Depot (ODP) apparently has acquired Complete Office Solutions, a $150 million midmarket office equipment supplier, according to OPI.
ChannelE2E has reached out to Office Depot for comment but we have not independently confirmed the report.
> Related: New Financial Details From Office Depot's CompuCom Buyout (Oct. 12, 2017, 6:31pm ET)
According to OPI:
- Complete Office Solutions is one of the largest independent office supplies dealers in the US, which employs more than 300 people, and operates out of three divisions in Washington state, Wisconsin, and California.
- Ted Nark co-founded Complete with Rick Israel in 2003. During their tenure, the company has grown from $1 million in sales in its first year to about $150 million through a combination of acquisitions and organic growth. All divisions are now owned by Office Depot.
- The company will operate as a standalone unit of Office Depot focused on midmarket customers.
The apparent deal comes one week after Office Depot acquired CompuCom for roughly $1 billion -- or 10 times EBITDA, sources close to that deal told ChannelE2E. Armed with CompuCom, Office Depot wants to blend IT services and product sales into the SMB market.
Complete Office Solutions: Smart Move?
Assuming Office Depot is really buying Complete Office Solutions and maintaining it as a standalone unit for midmarket customers, I believe taking that approach could pay off for Office Depot, and correct some M&A mistakes other big box retailers have made.
When Best Buy acquired mindSHIFT to dip its toes into managed services, the company ended up selling it just two years later. Lessons learned from that failure can give big-box retailers a blueprint for how to stick the landing.
- Stick with what you know - If anything, Office Depot knows about selling office supplies. Acquisitions can be successful when they allow the company to stay in the same lane and help them reach new markets.
- Allow for Autonomy - When a large company takes over a smaller one, it can be easy to go in and make sweeping changes. Allowing the acquisition to maintain status quo can help them continue their growth, which is what attracted the larger company to begin with.
- Provide Assistance - If the company can fill in the gaps of where the acquisition is lacking, in this case, it would be the purchasing power Office Depot has and its distribution channels, the acquisition can provide access to the markets they are already successful in.
It is still yet to be seen whether this acquisition pays off for Office Depot. If it does though, it will definitely help, not only Office Depot, but other big-box retailers by giving an example of how to successfully gain traction in new markets.