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Posted: Fri, December 20, 2002
Fruitful future for Mertec EveshamBasheera KhanIn 1980, a young-ish entrepreneur set about realising his vision of a thriving technology solutions provider, serving businesses of all sizes, all across Wales. He founded a company called Mertec Computers Plc, focused on networking and communications solutions for the public sector, and over the years grew the company into a leading provider of technology solutions for business in Wales. Twenty-two years later, Roy Morgan made the decision that would lead to Mertec Computers' being acquired by Evesham Technology Holdings, a Worcestershire-based computer manufacturer with operations across Britain. Morgan had toyed with the idea of phasing himself out of the day-to-day operations of the company, but needed a way to do so without unsettling existing or potential clients. The catalyst came early in 2002, when his wife began experiencing ill health. Morgan enlisted the services of a mergers and acquisitions broker to actively market Mertec as a potential acquisition. "Companies like this regularly get offers, or expressions of interest for acquisition, so I knew that there was a market for it," he explains. "We had lots of interest - I spoke personally to about six or seven companies, and Evesham, in terms of the long term future of this company, I thought, were by far the best." Almost all of the other businesses that had expressed an interest in Mertec Computers intended to close down its retail business, the Microstore. With 15 showrooms across the country, Evesham has a very strong retail focus, an aspect which once the deal was concluded, was clearly illustrated by its investment of £100 000 into refurbishing the Microstore. The new look Evesham Microstore in Singleton Street, Swansea, will soon be joined by another of its kind in Cardiff. Networking the advantageBut though the Microstore was Mertec's most high profile business, retail had contributed just a fraction of the company's revenue. Mertec's core business has always been in supplying total networking and communications solutions to the public sector, and it is that which proved most attractive to Evesham.The proposition was sweetened by the fact that Mertec's public sector involvement is largely in Higher Education, an area which requires highly specialised expertise on the part of any business looking to compete - and competition is slim. The result was a new subsidiary for Evesham Technology Holdings - Mertec Evesham, announced in October 2002. Morgan believes the new company has a significant advantage going forward. "Private sector business is not big in Wales because so many of the companies that are in Wales are simply a satellite centre - very often you'll see what appears to be a large company which, as it turns out, doesn't make purchasing or strategy decisions on IT - that's left to the parent company in England. So what chance was there for a company like Mertec to supply on a national basis?" "Our business has developed in the public sector, because that's where the market is. But even in the public sector, we haven't had sufficient clout to obtain some of the bigger contracts. In some instances we have, as in the case of Swansea University, and the Cardiff and Vale NHS Trust, but there's been a huge discrepancy in the way public sector organisations make decisions on suppliers for IT." "Some organisations, even though we provide them with the evidence that we can support an organisation like the Cardiff and Vale NHS Trust, have refused to allow us to tender for what we regard as fairly minimal requirements for a local authority in West Wales. There is incredible prejudice and close-mindedness about what local companies can do for them." "The effect of the purchase by Evesham is that we're suddenly a £115m company instead of a £15m company, so that excuse is taken away from them. It leaves us in a position where we can obtain more business as a Welsh company, and therefore local employment opportunities will grow as our business grows. And it gives us a real opportunity to obtain some of the much bigger contracts which in the past we've not even been allowed to tender for." Culture shockThe integration of processes and business models is well underway, says Morgan, and should be completed early in 2003. The greatest challenge, he says, has been in meshing the cultures of the two companies - inevitably, there are differences in marketing and sales methods, revenue streams and the nature of existing customer demands.But Morgan is optimistic in looking to an outcome which blends the best that both companies have to offer. "Traditionally, Evesham has sold products, whereas Mertec sells a total solution. Going forward, it's likely that Evesham will build most of the computers, because they have a very good manufacturing facility, and they can buy at higher volume and lower price. That's an advantage for us; it makes us more competitive on both service and price, which means we can get more business in Wales." "It will make a real difference in terms of our document management product, Filescan. We haven't had the money to market that product and continue the development to the extent that we want. Evesham will take on the sales and marketing of that product, and that will leave us free to develop it further in Swansea." His only regret, says Morgan, is that Mertec's growth and development had to happen through acquisition. "It was a shame that it had to happen this way; I would have preferred a management buy-out, but in order for Mertec to survive, this had to happen." ContactsMertec Evesham TechnologyTel: 01792 534 500 Email: sales@mertec.co.uk Web: www.mertec.co.uk |
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