Has Covid-19 changed workstyles forever?

We have all seen our world in 2020, with our working lives altered for the foreseeable future; But with potential vaccines and a gradual return to work in the age of the ‘new normal’, could Covid-19 change our workstyles in ways that reduce the market for huddle rooms, conference rooms and other office-based collaboration spaces? Tim Kridel speaks with Jeff Irvin, principal, Spinitar to find out.

Irvin said: “In my lifetime, I don’t think boardrooms, conference rooms, training rooms, classrooms and huddle rooms are going to go away. There’s still going to be a time and a place and a need. There’s still no substitute for face-to-face, live interaction. All of this desktop video – Teams, Zoom, etc. – certainly gives people the ability to work virtually and remotely. But to me, desktop video is just a better phone call. I don’t think there’s any substitute for personal interaction. 

“I think one of the biggest things that gets lost is culture. I think we’ll probably see more office spaces that are less cubicles and offices and more meeting collaboration spots. That will take a greater percentage of the rented office space. I’m not worried that all of a sudden my business is irrelevant.” 

The telecommuter segment has been growing steadily in the wider world of work for years, with the pandemic arguably accelerating the adoption of remote worker culture to all new levels. 

Irvin believes that businesses cannot stand still in this new landscape of commonplace remote working. 

Irvin: “We are trying to figure out how we can address the remote worker. We have identified ourselves as a UC company, but we’re more of a traditional AV integrator. We are now trying to also address the needs of the mobile worker. Due to the virus, we must evolve.  The landscape has changed and ultimately widened, which is a great opportunity for us and for the industry”

“A lot of integrators and a lot of manufacturers are scrambling to see what kind of home office/mobile solution we can offer that doesn’t completely venture outside of our core competency. Right now we’re looking at having a good-better-best home office offering that may incorporate some pre-packaged solutions from our core manufacturers or we may piece together some custom offerings from our manufacturers – even such that we can kit it, bundle it, ship it so the person in their home office can set it up, and it doesn’t require pulling cable and hanging mounts on walls.”

Many businesses have been flocking to ‘conventional’ conferencing platforms, identifying gaps in the marketplace where many integrators have not ventured. 

Irvin said: “Quite frankly, corporations are going to go directly to Zoom or directly to Microsoft to buy that. They’re not necessarily going to buy that from me. Unless I’m bundling in an enterprise solution, I’m not going to get that phone call.

“I wish we would have made more of that transition into UC because I think we’d in a better position now to be able to support the mobile workforce. Verizon buying BlueJeans for example, that’s a very strategic play that makes a lot of sense.”

About how the industry’s fragmentation will drive more consolidation: 

Looking to the future, Irvin believes that the industry’s continued fragmentation in these trying times could very well drive even further consolidation. 

Irvin:”It still is an industry that’s absolutely ripe for consolidation. If you look at the SCN Top 50 list, you have outliers like Diversified and AVI-SPL/Whitlock and a couple that have topped the billion-dollar mark, and then another handful that are knocking at the door and then another 10 that are substantial players. 

“There are a lot that are stuck in my category of a middle market around that $50 million annual revenue mark. As the big get bigger, it really motivates me to get larger because I have to be able to remain relevant and be able to compete price-wise. The bigger players, their discount schedule looks a lot different than mine, so I have to get bigger. There’s a motivation for me to grow.

“It’s still very small and very fragmented, like a ‘mom and pop.’ Industry. If I’m the 25th largest AV integrator in the U.S. at $50 million, that gives you a sign of how ‘mom and pop’ it is. There are some players on that top 50 list that are substantially less.

Acquisitions by private equity firms have been growing in recent years, but Irvin believes that there are more strategic moves than private equity plays in the industry today. 

Irvin: “I think private equity is looking for much more upside. Generally, our industry does not yield the EBIDTA [net income] that others do or that they would be used to. They’re looking for companies that are, eight, 10, 12 at a minimum EBIDTA. Normally, our industry doesn’t yield that kind of return. 

“I think there are going to be a lot of strategic plays. There will be a lot of acquisitions once we get down the road from this current state, and I think those are for all the right reasons. Going into this year, part of our strategic growth plan was – and still is – to double the size of the company in the next five years. We’re still figuring out how to make an acquisition this year and next year back to back acquisitions.”

Irvin foresees a slowdown in acquisition activity as we reach the end of 2020. 

Irvin explained: “Due to Covid-19, the M&A activity in our industry that was so active will most likely go quiet through the end of the year.  The acquisitive will need to first get their arms around their existing businesses before re-engaging in the hunt.

“There have a been a few rollups in our industry but normally those don’t work. If anyone ever invested in our company, they most likely would be a strategic investor.  I think I’d be most comfortable with a strategic investor, because our company could be a platform for another company wanting to get into our industry, whether it’s an electrical contractor or an IT services firm or a furniture company that wants to own more of the room.

“What we do is hard. You could pick a lot of other industries that are easier to get into than AV. Customers will not pay for that black magic of making it work these days. They have an expectation that you plug it in, and it works. I can go to my customers and say I can do work for you virtually wherever you have an office. That allows me to show as many pins in the map as an AVI-SPL. I can even show more. It’s pretty powerful stuff.

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