Tuesday, May 06, 2014

Quoth the raven: Epicor

Wow, that didn't take long.  The WSJ reports Apax Partners is putting Epicor on the block, hoping to find a sucker^H^H^H^H  buyer that will give them a 3x return on their investment in as many years.  Not a lot of detail yet, but here's one nugget that Graveyard readers will enjoy:
In 2012 and 2013, Epicor issued $340 million and $350 million of new debt respectively, to fund dividends to its private-equity owner
Again, wow.  They loaded up this already-unwieldly behemoth with MORE DEBT to pay themselves, TWICE.  And now, not halfway through the year, and only seven months after bringing in a quick-flip CEO, they're looking to unload it for good.

I'll start the bidding at one dollar.

p.s. - got a busy day today, but I know I've got at least one stanza of poetry in me that will pay off the title of this post.  Stay tuned...

UPDATE:  OK, here we go, from the perspective of an outside auditor:

Once upon a business dreary, while I pondered, weak and weary,
Over many a curious volume of financial bore — 
  Not completely understanding, in deeper debt ever landing, 
Why the owners keep demanding, dividends, fees, and ever more.
“’Tis some error,” I muttered, “standing the company increasing poor  —
  Only this and nothing more.”

“Profit!” said I, “thing forgotten!—profit still, if books are rotten—
Customers damned, or tempest tossed by greed and ill ashore,
  Business plans of all acquiring, in deeper debt ever miring,
Execs and bankers rarely firing—tell me truly, I implore—
Who is—who is this foul firm?—tell me—tell me, I implore!”
  Quoth the Raven “Epicor.”


  1. What are your thoughts on Infor picking up the tab?

    1. As in, would Infor buy them? I can't imagine they'd want to, given that in the most optimistic, friendly reading of things, they've just barely started to rationalize their existing offerings. Bringing in a couple dozen more would make quite a mess.

      I assume Epicor has some PE colleagues interested somehow - or maybe a mashup with the much smaller Aptean, to make an anti-Infor?

      But heck, who knows? This is just crazy.

  2. But I thought you said Joe Cowan LinkedIn with Charles Phillips after Pervez was shipped out of town? Nice to know your satire is consistent.

    1. Just what I've always aspired to - literary criticism!

      You'll be pleased to know, Anonymous, that I've changed "never fired" to "rarely fired" in the poem above.

      Re: Pervez, I thought he stepped down to spend more time with his family...

  3. They merged Epicor with Activant for a combined $2 billion in acquisitions. No way the $3.5 billion asking price is just for Epicor. What are both of them together, around $1 billion in revenue?

    1. According to that WSJ article, "sales of $978.3 million in 2013 and ... about $1.3 billion in debt"

      Note that the debt number would be half that size, and much more proportionate to sales, if Apax hadn't insisted on ruining the balance sheet to extract dividends for themselves.

    2. So why would you pay the premium? It's a slow growth business. In their last 10-K's Epicor and Activant reported $440 and $371 million in revenues respectively. Add approximately $100 from the purchase of Solarsoft.This is a business growing at 3-4% annually.

  4. Chris Kanaracus goes through his rolodex to get every what-if buyer scenario possible (http://bit.ly/1ovXk8j) ... but I still don't get it.

  5. Maybe a good time to dust off an old domain name I registered for fun a while back: http://www.epinforacle.com/

    1. how about registering:

  6. Oh what to say, what to ignore
    About the fate of Epicor

    Their doomed merger with Activant
    Will lead many perhaps to rant

    “Oh what was APAX thinking of”
    But now APAX has had enough

    Of internal exec management bickering
    Achieving little and never fixing

    The little things that seem quite simple
    Like implementing E9 for your own people

    The execs must all now be quaking
    As thoughts of the millions they would be making

    Disappears and the truth must now be faced
    That at long last they will be replaced

    So come on Microsoft, Sage or Infor
    We need someone to rescue Epicor

  7. Two ERPs promised they could do some good,
    And sorry I could not work without
    I once'd it over, and long I stood
    And looked at one as long as I could
    To where it went in all my doubt;

    Then took the other, as just as fair,
    And having perhaps the better claim
    Because it was Epicor and seemed legit;
    Though as for that, and getting there
    Implementation was a serious piece of _ _ _ _

    And so that morning there I lay
    With a balance sheet more red than black.
    Oh, I kept the first for another day!
    Yet knowing how way leads on to way
    I doubted if I could get any cash back.

    I shall be telling this with a sigh
    Somewhere ages and ages hence:
    Two ERPs promised what they could, and I,
    I took the one less litigated by,
    But will my lawsuit make any difference.

  8. UPDATE: The WSJ reports Apax "has decided for now to retain Epicor Software Corp. after testing the market for the company" - http://online.wsj.com/articles/apax-takes-business-software-maker-epicor-off-the-block-1408139002

  9. As a former employee of ADP's Wholesale Distribution division, which was acquired by Prophet 21, which was acquired by Activant, which was acquired by Epicor, all I can say is "what a ride!"

  10. Get rid of the moron CFO. She is dumber than a rock. She should working at a grocery store - at least there she could gossip away to her heart's content as she bags your stuff...

  11. There is clearly a mandate from Apax to sell Epicor. The company is laying people off and closing offices. The intent is to drive up earnings as quickly as possible to increase the valuation. Apax would have sold this sad bastard of a company if CVC had offered a higher price.

    As a current employee I can state that the atmosphere within the company is simply depressing. Everybody knows that their future is uncertain and that they are being treated like the proverbial mushrooms. I would estimate that at least 80% of the staff have their resumes out on the street. Anybody joining Epicor for a senior role at this time is either a friend of Joe Cowan or desperate for any job available.

    So sad to see this company being driven into the ground by a bunch of incompetent execs who are only focused on their person pay-offs from a sale.

  12. They just restated prior year results
    Yes, the finance team is full of dolts
    With creaky, unhinged GL systems
    It's hard to fire on all pistons
    They have had three years now to fix
    This scrambled pile of monkey tricks
    But when the only thing you see
    Is how much is in this for me
    The easy things one could address
    Are considered someone else's mess
    The controller and CFO both should go
    Needless to say they really blow
    APAX, APAX please wake up
    Or you'll have will be an empty cup

  13. Turns out the private equity guys were not as dumb as you thought.


    1. Oh man, I never said they were dumb. I said they were lining their pockets at the expense of the company and its customers. The fact that there's always another PE group 3-5 years downstream just makes that point.