At the turn of the last decade, Misco was at the peak of its powers with revenues north of £300m, operating profits of over £10m and over 600 staff.
"If you're struggling at the moment you need to look in the mirror," Mike Norris, Computacenter
Alongside the likes of Computacenter, SCC, Insight, Kelway and fallen giant 2e2, Misco was one of the UK IT channel's true powerhouses, and was still ostensibly in growth mode when it opened shiny new offices in Weybridge in 2013.
But the Misco UK name abruptly vanished from view today as a last-minute rescue attempt to keep the business afloat in a reduced form fell through, leading the Wellingborough-headquartered player to call in the administrators. Its collapse comes seven months after a new management team, backed by Hilco Capital, bought the UK and European business from long-time parent Systemax.
What went wrong in the intervening five years? Was it mismanagement, a failure to move with the times, bad luck, or poor market conditions? Or a combination of the above?
Kieran O'Connor, who is currently sales director of Total Computers, worked at Misco between 1992 and 2007. He argued the writing was on the wall for Misco long before the new team - led by Alan Cantwell - arrived in March.
"I spent 15 years there and I learned the channel, and how to work with customers there," he said.
"It's a sad day. I just went to their website and it doesn't exist anymore after 30 years of it being there - it's a real shame. If Alan and his team had got there two years ago I think the story would have been very different.
"When I started at Misco there were only seven people in sales and when I left it was a £250m business. Its heyday was all through the noughties. It was the people that made it a great place and I have lifelong friends there that are still there today. It's down to mismanagement. I've never met Alan, but he seems like a nice guy and if he'd got to them a couple of years ago I think they would probably have been fine. I hope everyone finds somewhere."
Mike Norris, chief executive of Computacenter (pictured below), said Misco's death spiral bucks the trend of the wider market. He pointed to the recent positive results at not only Computacenter, but also Softcat and European resellers such as Atea and Bechtle, adding that he "broadly agreed" with Canalys founder Steve Brazier's recent predictions that Q4 will be the best quarter the channel has experienced for a decade.
"I think this is an isolated incident. In general resellers are doing pretty well at the moment. If you're struggling at the moment you need to look in the mirror," he said.
"I think the last thing I had to do with Misco is an article in your magazine where the guys were saying they had put their hearts and souls and livelihoods into it. I hope they were exaggerating, or otherwise they've lost everything in pretty spectacular fashion - and pretty quickly. One thing it does say about the industry is the importance of being well-financed as an organisation. You don't want some debt-laden business in this industry because it's growing quite fast at the moment. A strong balance sheet is going to help you. But this is a bit like saying today is Thursday - it's not exactly news."
Kelway founder Phil Doye echoed Norris' sentiments on Twitter.
Softcat CEO Martin Hellawell said Misco's recent announcement that it was investing in new back-end systems had given him some encouragement that the firm was back in investment mode following a bleak period of restructuring, but added that its collapse was "not totally unexpected".
"It had been in trouble for a while," he said.
"I saw a glimmer of hope, and thought maybe it was over the worst, but obviously not.
"For me it's a great shame to see an important player in the industry disappear and it's not good for the reputation of the industry. I feel very, very sorry for a lot of good people that have lost their jobs and livelihoods, and I'm sure they will go through a period of worry and stress and that's not a pleasant thing to hear at all. I'm ust disappointed it's come to this for people at Misco."
Hellawell (pictured below) agreed that Misco, which started off life in the late 1980s as HCS, is an isolated case for the channel.
"Steve [Brazier] was talking about there being a five per cent growth in the channel for the next few years, and that sounds about right," he said. "There will be good performers and not so good performers, and unfortunately there has been a victim here. More will do extremely well than fail."
Paul Barlow, managing director of Servium, agreed: "It was a tough gig [for the new team] and that's what it proved to be. I think turning around any organisation that's on a downward trajectory can be a real challenge. Even if you have a really good management team and some really good people at the company, sometimes external factors have an affect on whether that turnaround can happen. I think they had a chance, but unfortunately it's not worked out.
"It's a real shame because they were a really good industry stalwart for many, many years and in it's prime it was a great company. But one thing I'm fairly sure of is that the good people that worked at Misco will be snapped up by the channel, so from their demise there is probably opportunity for other people."
Misco UK's operating losses widened to over £8m in the year before the change in ownership but Stuart Fenton, CEO of QuantIQ, who competed against Misco when he headed up rival Insight's business here, said he felt the new team lacked experience and had not been given sufficient funds to turn the UK business around.
"Misco has been an IT industry icon for many years therefore it's demise is all the more disappointing," Fenton (pictured) said.
"It is clear that the business has not been in particularly good shape for a number of years and Systemax simply gave up and sold it. Unfortunately, some great people will lose their jobs and many customers will be negatively affected. I hope the distributors are insured for losses too.
"The new team had no relevant experience and initially appeared to follow parts of Simon Taylor's turnaround plan, but they didn't have the necessary skills to be effective. Ultimately, not paying VAT is suicide - you don't need any IT industry experience to know that is going to end very badly. Hilco clearly didn't buy the business, but gave limited financial support to [Misco CEO Alan] Cantwell. When those fund ran out - it was over."
Meanwhile, Scott Dobson, managing director of Cloud Distribution, agreed that Misco left it too late to move away from a commodity model.
"I think that, without exception, broadline, commodity distribution is dying," he said. "Everyone makes zero margin and relies on rebates to make money which, if the market falters, don't get met and suddenly you're in a position where you have negative cash flow. Scale only helps you for a period of time. In the end, there's no money in the model.
"Misco tried, far too late, to pull themselves out of the nosedive by trying to create value in the business but it was simply too little, too late."
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