Tech distributor Computers Unlimited, which focuses on the professional creative and digital home markets, has been acquired by Exertis. But what does the move mean for the firm? Dominic Sacco asks CEO James Sanson…
How will the acquisition affect your business?
The number one thing for us is it addresses our biggest weakness. Historically, while we’ve done well with some retailers, we’ve not had the same breadth of penetration into a wider group of retailers. Exertis has a 70-person retail team – ours was six people. So being able to integrate and leverage off that team, to help some of our brands get into retail and telco, is the big win.
And it saves us as we look at logistics. If we’d opened a new warehouse ourselves, that probably would have been a £2 million investment, and it avoids the need for that. Everyone seems to think it’s a smart deal for everybody.
How long has this deal been in the works?
Paul Donnelly, the founder of Gem (Exertis was previously known as Exertis Micro-P and Exertis Gem), has politely tried to sound me out several times in the past 10 years. And I’ve always said: “Thank you but the time is not right.”
So this chapter of turning interest into reality has all been in 2015. It’s all been quite fast – it’s all happened in about three months.
Will your customers automatically become Exertis customers now?
There will be no automatic ‘if you’ve got an account with one, you’ve got an account with the other’ integration. A bit like within Exertis today, customers of Exertis IT (formerly Exertis Micro-P) don’t have the same account number or even an account with Exertis Home (formerly Exertis Gem). So for the next few years, it will be the same. I’m sure if you called up and said “I’m an Exertis customer – here’s my account number,” it will help them get an account set up a little bit faster, but they will need a separate account, because we’re running on separate systems.
Exertis says it will be ‘business as usual’ for Computers Unlimited. Do you expect them to take a very hands-off approach?
I think one of the things that appealed to me about Exertis is, if you watch what they did when they bought Micro-P and Gem and their other businesses, they left them alone for quite a while. And I think that while Micro-P and Gem and some of the other businesses aren’t quite broadline businesses, they do a lot of volume with large mature manufacturers. What they like about Computers Unlimited is we are a bit of an incubator with young brands. And so, the agreement is they’re meant to leave us independent for the foreseeable future, other than warehousing, where there’s some synergies to be shared.
Speaking of warehousing, Exertis is planning to build a new 450,000 sq ft UK distribution centre next year. What does this mean for your current warehouse?
Our existing warehouse in the UK only has about a year left on its lease. And we were already using overflow outsourced warehousing because it wasn’t big enough anyway. So yes they’ve committed a new 450,000 sq ft facility, but they already have several 250,000 facilities around the place in the UK, and we’ll be fitting nicely into one of them.
What makes your firm a good fit for Exertis?
I think the simple thing is we’re a great incubator of young and medium sized brands, so we bring that to them. If you’re an American startup with no resource in the UK, you can get very lost in a big distributor – and that’s where we come in.
Computers Unlimited has annual revenue of around £140 million. Do you expect to see a significant increase following the acquisition?
I don’t necessarily expect the revenue to rise dramatically. I think neither Exertis nor us are particularly focused on revenue. We’d rather focus on the quality of the business. And whether the revenues go up materially, or it just becomes a higher margin business with better profit, I’m not sure.
Were there any other offers aside from Exertis?
No – the interesting thing was they approached us. So in that sense, no, there were no other offers. We haven’t gone looking for this.
Will anything else change?
The board and all the directors are tied in on long-term contracts, so there should be no changes in the team, we’re in the same office building, there’s the same logo over the front door. It really is business as usual, but coming into their retail channels and using their logistics resources.