Field Notes: Technology Leader in MICR Engineering, Manufacturing & Distribution

Analyzing the Market Dynamics and Future Prospects of a Legacy Printing SMB

This one is a doozy, and I’m not sure what to make of it. I don’t have the experience (yet) to adequately assess the pros and cons. But the numbers add up, and the multiples appear reasonable — so I want to highlight the business anyway. Maybe someone out there can add some insight? At first blush, it would seem anything involved with printing is going the way of the dinosaurs. (Scroll to the bottom if you want to see video tour of the company.)

The future of MICR (Magnetic Ink Character Recognition) printing, the arena where Rosetta Technologies Corporation has been throwing punches since 1987, is at a crossroads. It’s not just about ink and paper anymore; it’s a battleground of tech evolution and market shifts.

First off, Rosetta Technologies. These guys have etched a deep mark in the MICR universe, especially with their exclusive deals with Ricoh. Their financials? Solid. A robust mix of hardware/software sales and consumables — a testament to their revenue diversification prowess.. And let’s not forget their commitment to innovation — showcased by their advanced color printer models. They’re not just playing the game; they’re ready to adapt to changing market demands.

But there’s always a catch — the MICR printing market is morphing. Digitization in banking and finance is bulldozing the old school paper trail. Checks, the bread and butter of MICR, are becoming relics. This digital wave could drown the demand for MICR printing. However, don’t count it out yet. Certain sectors still cling to checks for secure transactions, giving MICR a lifeline.

Tech advancements are a double-edged sword. Despite the onslaught of digital, some markets still swear by checks, keeping MICR in the game. And here’s where it gets interesting — the potential marriage of MICR with digital. This could be a game-changer, opening doors to new applications, all while boosting security and functionality.

Competition? Yeah, it’s fierce. Rosetta Technologies is up against alternatives that match or even outdo MICR in security and efficiency. This rivalry could either spark innovation or shift the market towards more advanced tech. The market might also see big fish swallowing the small, with major players diversifying into both MICR and digital solutions.

MICR is at a crossroads. The road ahead is fraught with digital transformation, environmental headwinds, and market shifts. Eager ‘entrepreneurs through acquisition’ eyeing the company need to weigh these factors, balancing the company’s current attractiveness against the turbulent tides of the MICR industry.

Business Overview

• Established History: Founded in 1987, Rosetta Technologies has a long-standing presence in the MICR technology sector.
• Niche Market: Specializing in engineering, manufacturing, and distribution of MICR technology, Rosetta occupies a niche market with specialized demand.
• Partnership with Ricoh: The exclusive global agreements with Ricoh, a major player in the printer industry, is a significant strength.

Financials

• Asking Price: $6,000,000.
• Gross Revenue: $6,648,805 and EBITDA of $1,000,000.
• Revenue Streams: Revenues are split between hardware/software sales and consumables.
• Inventory and FF&E: Inventory valued at $440,000 and Furniture, Fixtures & Equipment (FF&E) at $190,000 are included in the asking price.

Operational Insights

• The team consists of 20 employees..
• The Tampa, FL facility looks adequate for current operations, with manufacturing, operations, and shipping all co-located in a 12,000 sqft space.

Market Position

• Rosetta Technologies is one of only three companies globally specializing in MICR technology, which positions it favorably in the market against major competitors like HP, Xerox, and Source Technologies.
• Continuous development in MICR technology, including recent advancements in color printer technology, shows potential for market growth.

Growth Potential

• Product Development: The introduction of new color printer models and ongoing R&D in MICR and inkjet technologies suggest avenues for future growth.

Transition and Support

• Reason for Sale: The CEO and CFO are retiring. They are committed to training and supporting a buyer to ensure a smooth transition.
• Up to 10% of the transaction price can be seller financed.

About: Silverwave Field Notes combs through and analyzes thousands of businesses available for sale that may be of interest to entrepreneurs looking to acquire an existing business. We are not affiliated with the business listed for sale unless otherwise disclosed. The business highlighted above is represented by Nelson Consulting.

VIDEO TOUR: Click here.