Yes, there are opportunities for growth with new vendors and new customers. Yes, there are opportunities to increase economies of scale by combining efforts. There are any number of reasons why Synnex Canada chose this week to purchase distribution rival Supercom Canada in a $36.5 million deal.
But there’s one reason that sticks out above the rest for Synnex Canada president Mitchell Martin.
“The most obvious reason [for this deal] is the ability to gain market share in a key geography for Synnex Corporation,” Martin said. “The acquisition of Supercom demonstrates our continued commitment to and investment in the Canadian market.”
Beyond that, Martin said, one of the major drivers was the people of the Markham, Ont.-based distributor. “We pick up a lot of talented channel personnel, outstanding folks with a lot of tenure and an incredible amount of knowledge.”
Martin said adding Supercom also gives the company access to “larger relationships with vendors experiencing high growth,” and gives Synnex’s customer list a boost as well.
“[Supercom CEO] Frank [Luk] has tremendous relationships with a lot of customers, big and small,” Martin said.
And once the deal closes, he’ll have a chance to expand those relationships even further as he moves into the role of senior vice president of customer advocacy for Synnex.
Indeed, Luk is clearly one of the key people that Synnex acquires in the transaction. Martin said that Luk has a longtime friendship with a number of people at Synnex, including himself, founder Bob Huang, and current CEO Kevin Murai. The two organizations – and their respective leadership teams – were far from new to each other.
“Frank has been a customer of Synnex, and a vendor to Synnex,” Martin said. “We’ve been very close for many, many years.”
He added that the deal came about because Luk “thought now was a good time” to sell Supercom.
Martin said the combined companies will work to “limit redundancy on both sides,” but seemed to suggest that the company would retain as many Supercom staffers as possible, both because of the aforementioned advantage they provide, and because he said the company prefers to be “aggressive in terms of staffing for growth opportunities” rather than aggressively cutting expenses and realizing increased profitability that way.
“The focus is always on growth and synergy,” he said. “The incremental value here is in one plus one making three.”
Martin said Synnex is also taking a wait-and-see approach in terms of what to do with Supercom’s former locations, including its headquarters in Markham. With Synnex already operating a headquarters in western Toronto, and a major facility in nearby Guelph, Supercom’s location brings Synnex to three locations in the Greater Toronto Area. But he said the company’s strategy is “to be where our customers need us to be,” as evidenced by its warehouses in Halifax and Calgary. And post-integration, he wants a chance to see “where the customers want us.” No doubt, that includes special consideration for Supercom’s huge presence in the packed system builder and solution provider markets in the packed Markham area.
For now, the Supercom office remains in action, although Martin said the Supercom brand will quickly disappear in favour of the Synnex name. Any decisions on staying at or leaving the Markham location will “pan out through the year” as the integration is completed, he suggested.
In a press release announcing the deal, Martin is quoted as saying that he looks forward to working with Luk and his team to make Synnex the largest distributor in Canada. So how far off that goal will Synnex be once it integrates Supercom next month (assuming regulatory approval)? It’s hard to tell, since neither Synnex nor its biggest distribution rivals publicly break out Canadian numbers in a meaningful way. But it’s certainly a move in the right direction, Martin believes.
“Just based on market intelligence, we do believe this transaction makes us one of the largest distributors in Canada,” he said.