MindShift Technologies has agreed to acquire Alpheon in a merger between two members of CRN's 40 Most Innovative MSPs to create a $100 million-plus Super MSP.
The deal gives mindShift, based in Fairfax, Va., an expanded geographic presence in the Southeast and increases its capabilities with health-care customers, said Paul Chisholm, chairman and CEO of mindShift. Terms of the deal were not disclosed.
"Alpheon has a strong presence in the health-care vertical. We have a presence there, but they have a big presence and it's an important vertical to get into," Chisholm said. "They have a great services reputation from a health-care perspective. They understand the common IT infrastructure but also the applications that a doctors' group uses. They are that one-stop shop for that health-care customer."
Alpheon becomes mindShift's eighth acquisition since Chisholm joined the company in 2003, but its first deal since 2008. Chisholm added that mindShift is now the largest MSP in the U.S. serving the SMB market.
"We've been talking with lots of people but we would not just do an acquisition for the sake of doing an acquisition. We do it if things blend in in the right way. It takes a while to get the right fit," Chisholm said.
MindShift will continue to look at further acquisitions, but also focus on organic growth, he said. To date, about half of the MSP's revenue comes from organic growth and half from buying companies, Chisholm said.
The deliberate pace of acquisitions is due in large part to the nature of the MSP industry, Chisholm said. Most companies are small, under $5 million, and locally owned. The model makes it difficult to do a "roll-up" of several companies in a short period of time, he said.
"We like to call it selective consolidation," Chisholm said.
Over the next year, mindShift expects more companies to look to outsource their IT operations to MSPs and cloud companies, and Chisholm believes his company can be the trusted advisor for those companies. "Customers are saying if I keep my own IT staff they can focus more on applications and processes to move the business forward. Generally, that's the trend in whole business, to use more cloud services. That trend will continue," Chisholm said.
The health-care industry in particular will continue to move in that direction because of federal mandates for electronic medical records, Chisholm said.
"[Health-care customers] are looking not just for the application, but to be put on a solid infrastructure so they can do what they do best, be a doctor. They want to outsource the running of the system," he said.