Epicor for Sale … Again?

According to today’s Wall Street Journal, it appears that Epicor, the provider of Eclipse to many electrical distributors, is up for sale again.

Apax Partners, the private equity firm that purchased Epicor in 2011, and eventually Activant, reportedly is again weighing a sale.  It last did so in 2014.  This time other private equity firms are expressing interest in light of a boom in technology company buy-outs.

In the article it mentions that Epicor no longer releases financial results but …

• It turned down offers to sell the company for about $3 billion, inclusive of debt, in 2014
• Valuations of publicly traded companies, which Epicor is not (public), have declined.
• The company has posted narrower losses, but still losses, in recent years although revenue has reportedly increased.
• In 2014 the company lost $20.8 million on $995 million in sales
• Distribution and manufacturing are consolidating industries
• Epicor over the past couple of years has, at least through discussions with past employees, down-sized.

While the article references recently billion plus dollar deals for Qlik Technologies and Marketo, these are companies with accelerating sales.

Epicor, while moving to cloud solutions, is on “old world tech company”… an ERP company for manufacturers and distributors.  For a company that either isn’t making money or barely making money, for another private equity company to come along and pile on additional debt and then have to make investments into either R&D and/or acquisitions and then seek an exit strategy in 3-7 years makes one wonder.  Where is the enterprise value?

And if they turned down about $3 billion, do they think they’ll get more?

For electrical distributors:

• Do you care if Epicor is owned by a different private equity firm?
• Recognizing that a different equity firm saddles the company with more debt that needs to be recouped, What % increase in fees would make you consider changing ERP companies?
• If you were to advise a private equity firm seeking to acquire Epicor, what advise would you give them regarding the Eclipse package and Epicor services? Are there bolt-on services / modules / packages (hence acquisitions) that should be considered?
• Is having in-house Eclipse knowledge / support (so you are not dependent on Epicor) a competitive advantage (and perhaps a reason why some companies are sold to others with the same platform)?

Or, is this a non-event and you figure it will regularly be sold / traded and as long as your ERP system has some level of support you’ll be happy?