15 Canadian MSPs Become One: MSP Corp, Groupe Access Merge With Eye On U.S. Acquisitions

‘If we look at the size of clients that we’re going to actually be going after, many of them will have offices in the U.S. and vice versa. Many of them in the U.S. have offices in Canada, and we absolutely want to be able to be able to deliver a North America-wide services catalog, and not just a kind of Canadian one,’ says Habib Malik, former Groupe Access CEO and now CEO of the merged company.

MSP Corp, a company that has acquired 10 MSPs which remain independently run while sharing common back-office systems, has itself been acquired by two private equity firms.

Those private equity firms, Montreal, Quebec-based Alfar Capital Management and Westmount, Quebec-based Walter Capital Partners, at the same time acquired Montreal-based Groupe Access along with two other smaller MSPs and rolled them into Guelph, Ontario-based MSP Corp.

With the acquisitions, MSP Corp now includes a core of 15 MSPs across Canada, making it one of Canada’s largest MSPs and giving it the scale to grow in that country and soon into the U.S., said Ravi Ramharak, co-founder and CEO of MSP Corp and now chief merger and acquisition officer of the merged company.

[Related: MSPs And Private Equity: What Makes An MSP Stand Out From The Pack?]

The acquisition and merger, which has been completed, has been in the works for some time, Ramharak told CRN.

The conversations started in late December and moved into progressive stages in January and February, he said. “We were working through the concept since then to complete the transaction. So it’s been about just shy of four months of work between us.”

MSP Corp is a group of 10 Canadian MSPs focused on small to midsize businesses, Ramharak said.

“We’re providing IT services focused around IP support, backup, transformation, [Microsoft] Azure and cybersecurity,” he said. “Those 10 MSPs were acquired by MSP, where we keep the front names and provide back-end office integration. And that will continue to be the strategy: back-office integration while keeping the regional front names.”

Strategy Behind The Acquisition(s)

Habib Malik, former Groupe Access CEO and now CEO of the merged company, told CRN that the strategy is important for MSP Corp.

“In our industry, we have very specific types of products and services that we sell,” Malik said. “There are some services that consolidate very well. There are other services that are very customer-centric. So the people that they’re dealing with, and how you deal with them, do have regional differences. And we find that if we allow our offices to operate at a front-end level directly with those customers, customer experience is better.”

MSP Corp is very customer-centric, Malik said.

“So when we’re looking at the strategy and the structure moving forward, everything we will do will be focused around the customer,” he said. “And for that reason, we feel that leaving the local brand to operate under that brand but powered by MSP Corp brings all of the leverage, the volume, the strength and the talent of the whole organization to bear, but allowing the office to be the face, the front, and the customer-facing.”

Malik said MSP Corp brings to the merger 10 MSPs, while Groupe Access brings itself plus an additional two. These, together with the two new acquisitions, means there is a grand total of 15 MSPs in MSP Corp, he said.

Despite the number of MSPs, there is little or no overlap in business or potential for competition between them, Malik said.

“When we looked at purchasing them, we did a very, very tight due diligence to understand the customer, the customer base, customer location, geography and product services set,” he said. “And what we found was extremely complementary. Very, very little did we see any situation where we were working with the same client or in the same space. So this for us, every office is a net add to the total.”

With the number of MSPs that make up MSP Corp, there are many opportunities to cross-sell different skills, Malik said.

“We are putting together a services catalog which will clearly define the services that we are able to deliver pan-nationally,” he said. “We are then going to be able to leverage each office both from a technical and a sales approach and sales collateral perspective and be able to sell that services catalog right across the board. And there are many offices like that that have strengths in certain areas.”

There will definitely be more acquisitions going forward, including in the U.S., Malik said.

“If we look at the size of clients that we’re going to actually be going after, many of them will have offices in the U.S. and vice versa. Many of them in the U.S. have offices in Canada, and we absolutely want to be able to be able to deliver a North America-wide services catalog, and not just a kind of Canadian one,” he said.

MSP Corp and Groupe Access got together on the deal with help from a couple of financial advisers working with MSP Corp, including Focus Investment Banking and CIBC Capital Markets.

Stan Gowisnock, senior investment advisor at Vienna, Va.-based midmarket investment bank Focus Investment Banking, told CRN the final deal was all about getting two management teams passionate about joining forces.

“They realize, obviously, that the value for them is stronger as an expanded team than on their own,” Gowisnock said. “We were fortunate to have an abundance of suitors in this transaction, but the driving factor was their passion to come together and join forces. I think the other part of it was, we were very much focused on North American expansion and taking full advantage of joining their entire talent pool to hopefully better position themselves to deploy and provide expanded best-in-class service levels to their clients, which is paramount.”

In the acquisition, Alfar Capital and Walter Capital Partners are purchasing MSP Corp. MSP Corp’s previous owner, BDC Capital Growth Equity Partners, along with Ramharak and about 10 percent of MSP Corp’s employees are rolling some of their shares into ownership in the expanded MSP Corp. Malik also comes in as an equity holder in the company as well.

What’s Next?

Looking forward, the new MSP Corp is dedicated to expanding into the U.S. market, Malik said.

“I would make a strong note that we’re coming to the U.S.,” he said. “We’re going to come strong to the U.S. And we’re going to do a lot of acquisitions on there in the near term. And I think people should be ready for that.”

Also watch for MSP Corp to invest in expanding its technical offerings to meet the evolving needs of customers, Malik said.

“Many of the products and services that the offices are offering are extremely relevant to the market right now,” he said. “We are building with all of our partners location- and device-agnostic networks, allowing people to work on any device from anywhere they want. We’re leveraging multi-cloud environments, really putting a lot of work behind the cybersecurity aspect of the endpoints and anything that might be on-prem or in multi-cloud. So those services that are extremely relevant.”

Furthermore, MSP Corp is investing in the kind of R&D that Canadian companies typically do not address, Malik said.

“This year, we’re going to be making a heavy investment in AI,” he said. “Everybody says that, right? But it takes an institution like ours that has boots on the ground, talking to customers every single day and listening about what aspect of AI is actually going to be productive, usable and deployable in the near future. When we talk AI, there’s a lot of buzz around that. But nobody sits down with a customer and makes the connection to say, ‘Look, we can take AI today in this form and make an application usable out of it for you.’ And that’s literally the kind of thing that we’re going to be aligning on.”