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Company to join copier battle

Three years ago Thomas S. Johnson was terminated as chief operating officer of Danka Business Systems PLC in St. Petersburg after only two years on the job.

It was a friendly parting, Johnson recalled. Danka chief executive Dan Doyle wanted to consolidate the COO duties into his own position. Johnson, a Florida native, stayed in Tampa as a consultant to independent copier dealers.

Now Johnson is starting his own copier dealer company in Tampa, and he claims to have the financial backing to make it grow as large as Danka within five years.

His helping hand: Golder, Thoma, Cressey, Rauner Inc., a Chicago venture capital firm that he says will invest $100-million the first year.

"We can devote a fair amount of equity to this effort," said Jeffrey Gonyo, partner at Golder, Thoma. "If we can find good companies at good prices, we'll continue to fund it."

Acquisition will be the name of the game for Johnson's as-yet-unnamed company, which will employ 8 to 10 people in Tampa the first year. Johnson said he expects some of his targets will be former clients.

"My clients, if they would sell to anybody, would sell to me," he said.

Already three acquisitions await the new venture; combined, the three companies total $75-million in annual revenues, Johnson said. He wouldn't identify the companies until the sales are complete, expected around the end of May.

Their price, he said, would be between 40 percent and 60 percent of their revenues _ or $30-million to $45-million combined.

The copier dealer business is a fragmented one, populated by an estimated 9,000 small companies in addition to Xerox and Kodak's own national distributor networks. They all sell a combined $25-billion in copiers and related products and services each year.

But the industry is undergoing rapid consolidation, as technological advancements and superstores like Office Depot squeeze out the mom-and-pop dealers, Gonyo said.

Copier giants Danka and Alco Office Products, in Wayne, Pa., have been on acquisition binges in recent months. Danka alone has snapped up 14 businesses with total revenues of nearly $228-million since last April.

Danka officials couldn't be reached for comment.

Gonyo said he expects Johnson's company to be the third big buyer in the copier dealership market.

"Now is a good time do it while only two consolidators are out there," he said.

Golder, Thoma, with $700-million in venture capital available and total revenues of $2.5-billion last year, is adept at capitalizing on fragmented industries just beginning to consolidate, Gonyo said. Golder, Thoma has invested in similar start-up ventures in the funeral and paging systems businesses, he said.