Support Fees for your ERP
There is one thing that most electrical distributors will gladly complain about and that is the support fees that they pay to a software company like Epicor , Infor, SAP and others. Some distributors question what these companies do with all the fees they collect as they go forward. We’ve actually heard some distributors laud their software companies with the amount of current technology they bring to market. Others are not pleasant about their software company…probably with good reasons.
APAX Partners and EPICOR go forward
It was just a few months ago when Apax Partners merged Activant and Epicor, with the resulting name being Epicor as they moved forward. It was thought at the time that there would be some economies of scale, but soon Epicor’s president announced that Epicor had $1.4 billion in debt, in their Q3 filing: To see the filing click here. Epicor’s president went on to say:
- “We have substantial indebtedness, which increases our vulnerability to general adverse economic and industry conditions and may limit our ability to pursue strategic alternatives and react to changes in our business and industry”.
- “We may not be able to generate sufficient cash to service all of our indebtedness, including the notes, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.”
On June 3, 2013, Epicor returned to the high yield bond market so they would have enough money to pay a dividend to Apax Partners. Click on the high yield bond markets above, to see the report.
So we ran this report by some distributors to get their take on this event and as you might expect:
- “Aren’t dividends paid out of profit that has been earned?”
- “What is going on…can’t they manage the company with the fees paid?”
- “Sounds like deeper problems to me.” ( We heard this from more than one or two distributors.)
So, it begs the question as a distributor that uses an Epicor ERP package and can’t seem to manage their business and provide services, what do you do?
Or what do you think is happening?
- “Aren’t dividends paid out of profit that has been earned?”
- “What is going on…can’t they manage the company with the fees paid?”
- “Sounds like deeper problems to me.” ( We heard this from more than one or two distributors.)
Or what do you think is happening?
12 Comments
We’ve been told that there would be no additional development on Eclipse.I assume all got the same word.
They have given us the smoke and mirrors treatment about the New Epicor and what they think their plan is for merging us over.
Personally I think they are full of themselves and they are not going to hit their target date.
We came away from their meetings and started to look for another ERP or another way to get out of this mess with Epicor. ERP works fine for now…Epicor is problem.
interesting, and we hear that with money “cheap” companies are able to get bonds for operating capital or reserves at good rates and here we have a company paying high rates and OUR ERP system being rated as junk! Makes me nervous that there will be any investment into the system to keep me competitive. I know many of the national chains went to Eclipse, but they have the resources to invest in their own IT people or buy bolt-ons, I don’t. I thought my monthly fees were supposed to fund operations and development – guess I was wrong. As long as my system works, we’re okay … for now
Interesting developments. But having worked for several private equity owned companies in my history, the yearly dividend makes sense to me. Private equity firms expect yearly payouts, and this is standard practice. I feel the post seemed a little editorial by not counter-balancing that comment, “Aren’t dividends paid out of profit that has been earned?”, with all the facts.
not to mention the merger took place – not months ago – but years ago. Way to have the facts right.
Geeeezzzzz…Cheap money??? I don’t think so! Who would by those bonds to pay a dividend to a money partner? Are the lights still on at EPICOR?
Junk Bonds and junk company. Boy did we make a mistake with the Eclipse purchase and they aren’t through installing.
Our company is one of the nationals and we are now being told that we can’t or will not have a mobility offering for some of our customers.
This post probably explains why there has been a start and stop installation at our place.
We got snookered.
Sounds like they are running out of cash and the earlier poster is dead right: You can’t borrow your way out of debt.
The strange thing about all this is I knew they couldn’t run the company…I had that feeling at their annual user meeting. Fortunately we started a process to reveal all our other options and get to a open platform.
Well someone will probably buy them out of bankruptcy or they’ll engineer some money deal.
Electrical Distributors will suffer with little or no support and NO enhancement in technology.
After reading some of the comments above, I ran a D&B. Epicor and the whole gang of Software companies they own are involved in a LOT of law suits.
Also had a talk with their Financial person. They claim all is well and these suits are a matter of distributors not paying their support bills. Saw one of my buddies name on the list of companies being sued…..gave him a call. He says they don’t support their products. He gave me a list of people that are being sued by Epicor.
My guess is Epicor doesn’t support their products from what I hear….and on top of that I get the sense Epicor may have falsely misrepresented their products.
I’m just one company and I wouldn’t buy from them…..just too much smoke and mirrors and inside the court room for me. And now they are out in the junk bond market to pay a dividend. Come on…this is ridiculous.Snow chains won’t keep them out of the dich.
Thanks Jeb for passing it along. I had no idea they were in this much trouble.
I think Epicor has a contract for IDEA’s EDI offering which we use. If Epicor does hit the ditch, what happens to IDEA’s EDI?
Does anyone have a feel for it?
Merger announced in April 2011-not “months” as post suggest. High yield bond means “junk” bond in the world of private equity, normally BB or lower-its done all the time. Nothing much newsworthy here plus inaccuracy on merger time and 10Q announcement link is 2012.
What’s the point?
as if the merger time makes a difference in the financial performance of the company! ok, so they got the timing wrong … it’s still 14-15 months. Point is, what are my fees going to – product improvement and operations or private equity people?!
We did the D&B on Epicor, even though they cut the price and put the pressure on. It didn’t work.
That D&B report sent chills up my spine…if you think that this distributor would entrust my business software operation to Epicor that has “Public documents and quotes from their President”, that basically says that they are either in the ditch or are headed that way, Epicor is sadly mistaken! You’ve got a sorry state of affairs, if you have to float junk bonds to pay a dividend. My guess is you’ll ask your existing customers to buy those bonds.
It is my opinion,that you guys don’t know how to run your business profitably. I certainly don’t want to be dependent on Epicor.
These fellows at ET have done a good job of shining the light on a questionable company that may not be there in the future.
Eclipse Escape plan just jumped up to #1 on my To Do Business List.
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