Best Buy Stops Dabbling In Managed Services, Sells mindSHIFT To Ricoh

Just more than two years after it bought mindSHIFT to break into the MSP market, Best Buy has decided to sell the managed service provider to Ricoh for an undisclosed amount, the companies said Tuesday.

Under the deal, expected to close in February, mindSHIFT will remain a fully owned subsidiary of Ricoh, with mindSHIFT CEO and President Mona Abutaleb remaining at the head of the company.

MindSHIFT brings more than 6,900 clients in 12 major markets and a wide portfolio of services to the table, which complements Ricoh's strategy to provide clients with a comprehensive set of solutions under a single umbrella, Tracey Rothenberger, executive vice president and COO of Ricoh, said in an interview with CRN.

[Related: The 10 Biggest Tech Acquisitions Of 2013 ]

"It's a great fit," Rothenberger said. "We think it's going to be one of the biggest powerhouses in our industry to match the needs of our customers."

Rothenberger said that Ricoh was drawn to mindSHIFT, in particular for its "synergistic" package of services, which complemented and enhanced Ricoh's current offerings. For example, he said that Ricoh currently offers VoIP on-premise services, while mindSHIFT offers hosted VoIP, which means together the companies can offer a more comprehensive suite of options to clients.

"We have some of those services today as part of our existing portfolio, and with mindSHIFT coming into the organization, we expand both our skill set and capabilities," Rothenberger said.

The channel had mixed feelings about Best Buy's forays into managed services when it acquired mindSHIFT in November 2011 for $167 million. However, the company said that as it embraces a new strategy focusing back on retail and consumer markets, the mindSHIFT business was no longer aligned with company goals.

"As we have made clear over the past year, our Renew Blue business transformation calls for greater focus on the core of Best Buy's business. The sale of mindSHIFT was made with that goal in mind," a Best Buy spokesperson told CRN in an email.

While the acquisition with Best Buy made sense at the time, mindSHIFT CEO Abutaleb said that the company no longer fits into the retail giant's strategy goals going forward.

"While I think we were really well aligned at the time, it was a new market for Best Buy at the time ... this is the market mindSHIFT is in," Abutaleb said. "I think the exciting part is that we will reach into Ricoh for their dealer network and their direct network ... and we will go to market stronger than we were alone."

Going forward, both executives said to expect lots of growth as the companies start to work together.

"When I take a look at this business as it exists, we're looking for exponential growth. They're a healthy organization now and we're going to continue to feed them a great set of customers. Merging with both our direct and dealer organizations, from a sales standpoint, is just going to accelerate the growth of this organization," Ricoh's Rothenberger said.

Rothenberger said that clients and partners can expect to see more strategic acquisitions going forward, with Ricoh actively looking for other opportunities and strategic fits to continue to grow the company and its portfolio.

"This is but one step in our journey. This isn't the spot that we're stopping. This isn't the ultimate goal," Rothenberger said.

PUBLISHED JAN. 21, 2014