5 Big Things To Know About KKR’s Ensono Acquisition
KKR’s move to acquire global services firm and IT solution provider Ensono is more than just another channel acquisition. It is part of a larger move to consolidate channel players as investor dollars chase the promises provided by long-term recurring revenue from customers concerned about building IT infrastructure for the future.
The Big Picture
Ensono’s acquisition by New York-based investment firm KKR & Co., with a potential estimated value of $1.7 billion, is not just a story about an acquisition. It’s also reflection of a consolidation going on in the IT solution provider industry.
Channel companies are looking to grow via acquiring their peers and/or competitors and adding new skills, capabilities, and geographies to meet business users’ needs for digital transformation and other initiatives. And they are often doing it with the help of investment firms looking to capitalize on the speed at which businesses are changing to meet ever new IT challenges.
There is a lot going on here that ties the Ensono acquisition to big industry changes. CRN took a close look at the acquisition and some of the key drivers behind it as a way to help explore the bigger picture in the IT solution provider business. For a look at what’s happening, click though our slideshow.
What Is Ensono?
Ensono is a Downers Grove, Ill.-based provider of IT services to help clients with IT infrastructure and digital transformation projects. The company designs, builds, and optimizes services for clients across mainframe, midrange system, private cloud, and public cloud infrastructures.
Ensono is ranked No. 94 on CRN’s 2020 Solution Provider 500. The company had 2020 revenue of $650 million.
Ensono’s customer list includes a number of well-known names including the State of Kansas, Travelodge, Guinness World Records, and Windstream in the U.S., along with Sheffield Hallam University and City & Guilds Art School in the U.K.
Ensono is an AWS Advanced Consulting Partner with over 135 AWS certifications and over 700 AWS accreditations. It is also a Microsoft Gold Cloud and Microsoft Azure Gold Cloud Partner. It also partners with IBM, BMC, Broadcom, Compuware, Dell Technologies, Hewlett Packard, Naspo ValuePoint, NetApp, SAP, Veritas, VMware, and Wipro.
The Terms Of The Deal
The actual value of the deal was not announced. Ensono is not a public company, and so is under no obligation to divulge the terms.
Reuters, when first reporting on that a deal between KKR and Ensono was likely to happen, said the deal could be valued at $1.7 billion, citing unnamed sources familiar with the matter. When CRN reached out to Ensono for more details, a spokesperson replied via email, “Financial terms were not disclosed and as a matter of policy, we do not disclose financial details.”
Reuters also reported that when Ensono was spun out from Acxiom Corp. in 2015, it was acquired by Charlesbank Capital Partners and M/C Partners in a deal valued at $190 million.
Why Now?
The IT solution provider business is currently going through a massive round of consolidation. Global solution provider Accenture has made over 65 acquisitions in the last couple years, including at least six this year alone. Converge Technology Solutions, was founded in Toronto in only 2018, has made 19 acquisitions, including four this year alone.
New York-based KKR’s decision to acquire Ensono comes during a time of big change in the IT industry and in IT services providers, said Ensono CEO Jeff VonDeylen (pictured).
“The good thing for services providers like us is that IT is now front and center for customers’ business,” VonDeylen told CRN. “IT used to be a back-office thing. But we let clients focus on their business while we focus on the things to help them do so.”
For KKR and other investment firms, technology and technology services are a core tenant of their investments, VonDeylen said.
“They are seeing companies moving to the cloud, and seeing companies like ours helping those companies succeed not only with the new shiny stuff but with the legacy technology,” he said.
Growth In Big Part Via Acquisition
While Ensono this time is the target of the acquisition move by KKR, the solution provider has actually made four of its own acquisitions.
Ensono was spun out of Savvis in 2015 as Acxiom IT, before it was renamed Ensono in 2016. Since then, the company has made four acquisitions, including three in the U.K to give it a global presence.
Ensono in 2016 acquired U.K.-based Attenda, a cloud platform providers with a focus on VMware, AWS, and Microsoft Azure.
That was followed a year later with what is arguably Ensono’s biggest acquisition, that of Inframon, a U.K.-based cloud transformation company. VonDeylen said Inframon brought Ensono a Microsoft Azure practice, which has now become a key part of its business. Indeed, he said, Ensono’s U.S.-based Azure practice is now much larger than its U.K. practice.
Ensono in 2018 acquired Wipro’s data center services business in a $405-million deal that included Wipro’s mainframe-focused managed services.
Finally, earlier this month, Ensono unveiled its acquisition of Amido, a London-based cloud-native software engineering firm with about 130 people. At the time, Larry Goldberg, Ensono’s senior vice president for global advisory and consulting services, told CRN, “Amido is focused on cloud-native application development. They’re taking customers’ business problems and creating new applications using microservices and other tools on Azure, Amazon Web Services, and Google Cloud Platform.”
Ensono’s Plans
VonDeylen told CRN that KKR’s investment in Ensono includes three different targets.
The first is to move ownership of all of Ensono to KKR from Ensono’s current owners, investment firms Charlesbank Capital Partners and M/C Partners. The second is a recapitalization of Ensono’s balance sheet. The third is bringing in additional capital to help drive further growth at Ensono, he said.
Looking forward, Ensono in 2021 will be focusing on three primary initiatives, VonDeylen said.
The first is adding new consulting practices similar to the cloud-native software engineering business it received from its acquisition earlier this year of London-based Amido, he said.
The second will be an increased focus on security, VonDeylen said. “We want to bolster our capabilities and get engaged with customers,” he said. “Security is a big opportunity, and one of our customers’ top two or three concerns. This includes compliance and auditing as well.”
Ensono also plans to expand development of its Envision IT infrastructure management platform, VonDeylen said. “Envision is a critical part of our ability to bring services to clients, and to make it easy for customers to interact with us,” he said.