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Deals reshape office supply business

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Jeff Gau is CEO of Marco, a Minnesota-based technology services provider that recently acquired Phillips Office Solutions in Dauphin County as a base for its East Coast operations.
Jeff Gau is CEO of Marco, a Minnesota-based technology services provider that recently acquired Phillips Office Solutions in Dauphin County as a base for its East Coast operations. - (Photo / )

The office service and supply industry in Central Pennsylvania has been getting a redesign as larger companies buy smaller rivals in a bid to expand their reach and boost services.

Minnesota-based technology services provider Marco recently acquired Phillips Office Solutions in Dauphin County to establish an East Coast hub.

Meanwhile, Lower Paxton Township-based Higher Information Group, a business equipment and services company, has acquired three companies over the last 18 months in Cumberland, Dauphin and York counties.

A national presence

Marco, which serves large swaths of the Upper Midwest, saw buying Phillips as the best way to advance its plan of becoming a national IT services firm. Marco CEO Jeff Gau called Phillips a strong company run by people — including owners David and Peter Phillips — he has known for more than 30 years.

“For us to buy a large company in our industry, we have to look at the people running it,” he said. “In a new hub, you want a company already doing it and you don’t want a fixer upper because it’s too hard to do remotely.”

Phillips, Marco’s largest acquisition to date, will do about $38 million in revenue this year.

As part of the deal, Phillips President Bill Shuey will stay on as regional president of copier and ECM solutions for Marco. ECM stands for enterprise content management.

Marco also retained the entire 140-person workforce at Phillips, and it is looking both for other deals and organic growth along the East Coast.

“This is an opportunity. We’re opportunists,” Gau said.

Phillips has traditionally focused on the office supplies and equipment business, while Marco has evolved more into an IT services company that also sells copiers and printers. Gau said he expects the deal will fuel more opportunities in Central Pennsylvania to become a full-service option offering both IT services and office equipment.

A bigger footprint

With the acquisition of Phillips Office Solutions, Minnesota-based Marco has 61 offices in 11 states.

Phillips, based in Lower Swatara Township, added 10 offices in Pennsylvania and Maryland to that total, including locations across Central Pennsylvania, the Lehigh Valley, Lycoming and Montour counties. In Maryland, Phillips has offices in Baltimore and Hagerstown.

Marco, a technology services provider, was founded in 1973 as a small typewriter company. As a result of acquisitions, including a flurry of deals over the last decade, the company has expanded throughout the Upper Midwest.

The company’s footprint now includes offices in: Illinois, Iowa, Maryland, Michigan, Minnesota, Missouri, Nebraska, North Dakota, South Dakota, Pennsylvania and Wisconsin.

Those services include managed IT services, hosted voice and Microsoft Suite offerings, among other additions. Marco has been investing in IT for more than 30 years.

“The print industry is flat at best. To grow, you have to get into less familiar spaces and invest,” Gau said.

Gau said he doesn’t see the print industry falling to zero because there is so much information online that people still print.

“We print less per person, but there is a lot more information out there and a lot more people looking for it,” he said.

On offense

Marco, which has made more than 40 acquisitions since 2005, has bought many businesses run by baby boomers looking to retire.

In fact, Phillips is one of those companies.

“We’re on offense at Marco,” he said.

Also on the offensive is John Frisch V, president of Higher Information Group. The Dauphin County firm recently purchased Armstrong Printery Inc. in Harrisburg to expand its print and mail division.

Last year, Higher Information Group purchased York Mail Services.

With those deals, Higher Information Group picked up mail and print clients in Dauphin and York counties to which it can now sell other services. The company has six divisions selling business equipment, IT services, recycled shredding, document storage, print and mailing services, and marketing services.

In July, the company purchased Lemoyne telecommunications firm Pennsylvania Telephone Products Co. in a bid to bolster its IT services division.

“IT services is probably growing the most,” Frisch said.

Higher Information Group has grown to more than 100 people through its recent deals, adding more than 20 people this year.

The company also opened a new office in Philadelphia this year to serve eastern Pennsylvania, where Frisch said he expects to see growth. He doesn’t have immediate plans to go outside of Pennsylvania.

“We just add on as it makes sense,” he said.

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Jason Scott

Jason Scott

Jason Scott covers state government, real estate and construction, media and marketing, and Dauphin and Cumberland counties. Have a tip or question for him? Email him at jscott@cpbj.com. Follow him on Twitter, @JScottJournal.

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