Acquisition Targets? Six VARs Vendors Could Find Attractive

With Dell's announcement it will purchase Perot Systems and Xerox revealing it will buy Affiliated Computer Systems, the tech world is wondering just what company will be next? After all, these things come in threes, don't they? Here's a look at some attractive solution providers that could tempt vendors looking to increase their recurring revenue via services.

CSC (2009 VAR500 rank No.66), with its focus on networking and IT services, could be a tempting, if expensive buy. The $16.5 million solution provider has a large public-sector business and could be ideal for a vendor in the communications arena. Eleven years ago, the solution provider thwarted a $9.8 billion hostile takeover bid by Computer Associates, now CA. Could be an interesting play for a networking vendor or a vendor interested in the growing business process outsourcing segment, in which CSC is well-known. Its price to earnings ratio is 10.72, with stock trading at $52.84.

Unisys (2009 VAR500 rank No. 31), another big player in the federal government market, could be scooped up by a vendor looking to increase its competitive stance there and cash in on some stimulus funding. Stephen O'Donnell from Enterprise Strategy Group told ChannelWeb's Brian Kraemer on Twitter (@briankraemer) that he thinks Dell's next purchase will be Unisys because of its attractive stock price and because of its top customer, the Fed. Unisys turned to services to survive -- which is ironically what makes it such an attractive target for takeover. Its price to earnings ratio is 19.57, with stock trading at $2.74.

Privately held Trizetto (2009 VAR500 rank No.130) had $481.7 million in 2008 revenue, an increase of 6.6 percent; specializes in the development of custom of software solutions; and offers IT consulting services as well as application hosting. Trizetto, along with Perot Systems, leads the medical claims outsourcing market with strong offerings, strategies and market presence, according to Forester Research. As health plans continue to cut administrative costs and build more flexible products, business process outsourcing companies like Trizetto are becoming increasingly attractive acquisitions.

Another huge presence in the business process outsourcing market, General Electric-owned Genpact (2009 VAR500 rank No. 129) recently earned a five-year contract for multiple finance and accounting services from UCB, a biopharmaceuticals company. Genpact posted a 20 percent year-over-year increase in net income for its second quarter ended June 2009. Its price to earnings ratio is 21.4, with stock trading around $12. Whether GE would be interested in selling is another question.

Iron Mountain (2009 VAR500 rank No. 47) offers a range of outsourced services that provide records management and help businesses control costs, reduce risks, improve access and protect information. It also is a vendor of its proprietary Accutrak software. Iron Mountain has a price to earnings ratio of 28.6, with its stock trading at $27.17.

Since partnering in September with unified IP communications provider Smoothstone IP Communications, FusionStorm has made itself more desirable to vendors looking to increase visibility in unified communications as well as IT services. Two years ago, John Varel, CEO of FusionStorm, said his company would consider being acquired. Privately held FusionStorm (2009 VAR500 rank No. 134) has made numerous purchases in the past several years, leading to its current revenue of $455 million.