Upping The Services Ante: 12 M&A Deals Reshaping The Channel
Stakes Grow For Software, Services Partners
Capabilities in areas ranging from application development to customer relationship management to remote access software were in high demand in October, with six of the 12 channel firms snatched up last month specializing in either software or services.
Solution provider powerhouses drove a lot of October's M&A action, with five of the big channel deals carried out by members of the CRN 2015 Solution Provider 500 and two others undertaken by massive Indian partners. Distributors and private equity firms were also acquirers, in two deals each.
Partners made a splash abroad last month, with five of the 12 channel acquisitions taking place outside the United States. Three of the acquired firms also appeared on the SP 500.
CSC
Company acquired: UXC Ltd.
Head count: 3,000 employees
Annual sales: $480 million
Purchase price: $300 million
Date of announcement: Oct. 5
Summary: Falls Church, Va.-based CSC, No. 5 on the CRN Solution Provider 500, notched its fourth merger or acquisition in the buildup to its November split, buying UXC Ltd., Australia's largest IT services company specializing in applications, infrastructure and consulting.
Melbourne-based UXC is in the top 1 percent of Microsoft Dynamics resellers worldwide, and also has strong relationships with Oracle, SAP and ServiceNow in Australia and New Zealand.
As of November 2014, the company's North American branch, UXC Eclipse, employed 230 people in Calgary, Alberta; New York; Phoenix; Seattle; Toronto; and Vancouver, B.C.
Ingram Micro
Company acquired: Docdata
Head count: 1,300 employees
Annual sales: $150 million
Purchase price: $175 million
Date of announcement: Oct. 13
Summary: Santa Ana, Calif.-based distributor Ingram Micro entered into an agreement to acquire the e-commerce and fulfillment business of Waalwijk, Netherlands-based Docdata to improve its foothold and elevate its brand in Europe.
Docdata is an established force in Europe with a brand recognition that Ingram Micro does not yet have there, Nate Gilmore, Ingram Micro's executive director of marketing, told CRN.
Docdata's payment solutions will give Ingram Micro the ability to better navigate the fragmented European financial landscape, Gilmore said.
Pomeroy
Merger partner: Tolt Solutions
Head count: 1,000 employees
Annual sales: Not disclosed
Purchase price: Not disclosed
Date of announcement: Oct. 26
Taylors, S.C.-based Tolt Solutions and Hebron, Ky.-based Pomeroy, No. 44 on the CRN SP 500, joined forces to create a nearly $1 billion channel behemoth with more than 4,000 employees.
The two firms are being brought together by private equity giant Clearlake Capital under the Pomeroy Group moniker. Tolt, though, will operate as a standalone division within the Pomeroy Group to maintain its focus on the industries it serves.
Tolt focuses on retail and food services, working closely with high-profile retailers such as Ahold USA, BJ's Wholesale Club and Wawa. Pomeroy, meanwhile, focuses on end-user, network, data center and cloud services across a multitude of verticals.
New State Capital Partners
Company acquired: NWN Corp.
Head count: 500 employees
Annual sales: $350 million
Purchase price: Not disclosed
Date of announcement: Oct. 16
Summary: NWN, a 15-year-old Waltham, Mass.-based company ranked No. 72 on the CRN SP 500, sold a majority of its stock to private equity company New State Capital Partners in hopes that the firm's resources can help the company become a $1 billion cloud services powerhouse.
Under the terms of the deal, NWN CEO Mont Phelps, Managing Director Jane Linder and the rest of the senior management team will remain in place and retain a substantial stake in the company.
According to Phelps, NWN needed more capital and scale to compete successfully against multibillion-dollar telcos and cloud service providers. This is the first technology investment for New State, which has offices in New York and Texas.
Tyler Technologies
Company acquired: New World Systems
Head count: 470 employees
Annual sales: Not disclosed
Purchase price: $670 million
Date of announcement: Oct. 1
Summary: Local government partner Tyler Technologies, No. 51 on the CRN SP 500, made its largest acquisition ever when it bought Troy, Mich.-based New World Systems. The acquisition will be complementary to Tyler's portfolio, thanks to a similar public sector focus at New World Technologies.
The companies have known each other for a long time and have competed in the local government space, Tyler Technologies CEO John Marr said in a statement. However, Marr said he believes that there is enough space in the market for both sets of solutions to coexist.
Plano, Texas-based Tyler Technologies does not plan to do away with New World's offerings anytime soon, Marr said.
PCM
Company acquired: Acrodex
Head count: 445 employees
Annual sales: $111 million
Purchase price: $12.5 million
Date of announcement: Oct. 28
Summary: El Segundo, Calif.-based PCM, No. 29 on the CRN 2015 SP 500, entered Canada by purchasing Edmonton, Alberta-based Acrodex, No. 92 on the CRN SP 500, a managed services giant specializing in cloud, staff augmentation and professional services.
Acrodex focuses on hardware such as PCs, servers, storage, network and printers, software asset management and services. The company works most closely with Microsoft, HP, Cisco and VMware, serving both government entities and private firms with more than 25 employees.
Both PCM and Acrodex have Microsoft's coveted Licensing Solution Provider (LSP) status, making them two of only a handful of North American Microsoft partners authorized to handle software volume licensing transactions.
Ingram Micro
Company acquired: Grupo Acao
Head count: 250 employees
Annual sales: $300 million
Purchase price: Not disclosed
Date of announcement: Oct. 20
Summary: Santa Ana, Calif.-based distributor Ingram Micro created cross-selling opportunities and boosted its expertise around application, software and services in Latin America by purchasing Brazilian distributor Grupo Acao in its seventh acquisition of the past year.
Sao Paolo-based Acao works closely with EMC, IBM, Oracle, Red Hat and VMware across technology areas spanning from hardware and storage to software and virtualization.
The distributor also has a robust services practice addressing everything from basic engineering and sales support to integration and delivery to channel financing and infrastructure-heavy projects.
HCL Technologies
Company acquired: PowerObjects
Head count: 250 employees
Annual sales: $37 million
Purchase price: $46 million
Date of announcement: Oct. 30
Summary: Noida, India-based HCL Technologies now possesses one of the largest Microsoft Dynamics practices in North America after purchasing pure-play customer relationship management (CRM) solution provider PowerObjects.
The acquisition should provide HCL with more services, support, education and add-ons around the exponentially growing Dynamics platform. PowerObjects has won Microsoft's Partner of the Year award in three of the past four years, most recently for its mastery of cloud CRM.
Minneapolis-based PowerObjects' add-on offerings filled gaps in Microsoft's off-the-shelf software, provided better integration with other products and added functionality in areas Microsoft isn't planning to get to for several years, said Greg Palesano, HCL's executive vice president and global head of application services.
Millstein & Co.
Company acquired: Atlantix Global Systems
Head count: 130 employees
Annual sales: Not disclosed
Purchase price: Not disclosed
Date of announcement: Oct. 23
Summary: Norcross, Ga.-based Atlantix Global Systems -- No. 155 on the CRN SP 500 -- was sold by Greenbelt, Md.-based Presidio, No. 21 on the CRN 2015 SP 500, last month as the company's shift toward managed services left Atlantix outside Presidio's core business.
Refurbished hardware reseller Atlantix was New York-based Millstein's second IT investment, coming nine months after it purchased Herndon, Va.-based DLT Solutions -- No. 35 on the CRN SP 500 -- from TZP Capital Group.
Infosys
Company acquired: Noah Consulting
Head count: 122 employees
Annual sales: Not disclosed
Purchase price: $70 million
Date of announcement: Oct. 19
Summary: Bangalore, India-based Infosys purchased Houston-based Noah Consulting to bring next-generation data analytics to oil and gas clients.
The acquisition should make it possible to provide oil and gas firms around the globe with end-to-end data management services covering everything from exploration to production. The deal will also make it possible to integrate supply chain and financial data with operational and technical data, an industry challenge that has never been addressed effectively.
Noah was founded in 2008, and works with the super major, independents and oil field service companies to plan, architect and deploy information solutions.
Insight Enterprises
Company acquired: BlueMetal
Head count: 100 employees
Annual sales: $25 million
Purchase price: Not disclosed
Date of announcement: Oct. 1
Summary: Tempe, Ariz.-based Insight Enterprises, No. 13 on the CRN SP 500, added Watertown, Mass.-based BlueMetal, an application development company, to bolster its ability to design and implement Web-based business applications specifically for financial and health-care businesses.
Insight will be retaining all of BlueMetal's employees after the deal closes, according to Mike Gaumond, Insight’s senior vice president of services. He said that the company is not looking to consolidate but instead hopes to benefit from a stronger market presence and BlueMetal's brand recognition.
SolarWinds N-Able
Company acquired: BeAnywhere
Head count: 51-200 employees
Annual sales: Not disclosed
Purchase price: Not disclosed
Date of announcement: Oct. 15
Summary: Remote monitoring and management (RMM) vendor SolarWinds N-Able, based in Ottawa, Ontario, acquired Portuguese company BeAnywhere to expand its MSP offerings to include BeAnywhere's remote access platform.
According to SolarWinds General Manager JP Jauvin, there was a huge demand to add the remote access software so that MSPs could have a dedicated platform that works seamlessly with SolarWinds's RMM platform and management software.
Lisbon-based BeAnywhere's platform is already rebranded and available from SolarWinds N-Able under the name MSP Anywhere. The company said it should be integrated with the rest of SolarWinds' offerings by March.