Turnaround Man

How did cash-strapped, debt-laden Xerox Corp. turn around its fortunes in six years to make a $1.5 billion cash acquisition of Global Imaging Systems Inc.? By investing in diverse talent.

In May, under the leadership of Kevin Warren , 44, the then senior vice president of Eastern sales operations, Xerox agreed to pay $29 in cash per share for Global Imaging Systems, a document management company that sells to and services the $16 billion small and mid-sized businesses market. Xerox, named one of BE’s 40 Best Companies for Diversity, wanted to expand distribution into that market, where installs of laser printers and multifunction products have been increasing at a compound annual rate of 15%. With more than $1 billion in revenues last year, GIS serviced nearly 200,000 non-Xerox U.S. customers. Xerox reported $15.9 billion in revenues in 2006.

“We didn’t have a strong presence. They did. It was a good match to bring them on to complement us in a space where we weren’t particularly strong,” says Warren.
“This is the most significant acquisition Xerox has made in the last 20 years,” says Warren, newly appointed senior vice president of the acquisition transition office at Xerox, responsible for managing the integration of GIS as a wholly owned subsidiary of Xerox.

“Xerox paid for a customer base that had a footprint already, so they didn’t have to start from scratch. It is a brilliant move,” adds Angèle Boyd, group vice president of imaging, printing, and document solutions at IDC, a global research and consulting firm covering the IT industry. “Now Xerox gets access to a network of partners across the country owned by Global. It makes their competitors sit up and take notice.”

Over the last five years, Xerox’s stock performance has steadily improved, rising to $19.25 per share on June 19 from $8.55 per share in early 2002, according to MorningStar.