10 M&A Deals Reshaping The Channel: May 2016
A Behemoth is Born
CSC has bid to remake the solution provider landscape by joining forces with the enterprise services arm of Hewlett Packard Enterprise grabbed all the headlines, creating a $26 billion Goliath with 5,000 clients across 70 countries.
But CSC was far from the only company making waves last month. Companies with cloud, software or line of business expertise were in high demand, as solution providers attempt to strengthen their position in everything from third-party security risk to Microsoft Azure migration.
Six of the 10 acquirers can be found in the top 30 of the CRN 2016 Solution Provider 500. Among the acquisition targets, four are based abroad, three are based in the Northeast, two are based on the West Coast and one is based in the Midwest.
Acquisitions are ranked based on the total number of employees at the firm being acquired.
10. Soaring Pine Capital
Company acquired: Technology Solutions Inc.
Head count: Not disclosed
Annual revenue: Not disclosed
Purchase price: Not disclosed
Date of acquisition: May 20
Private Equity company Soaring Pines Capital of Birmingham, Mich., bought Schaumburg, Ill.-based cable installation services provider Technology Solutions Inc. to capitalize on the coming wave of infrastructure upgrades in the cable industry, the company said.
After the acquisition, Technology Solutions was rolled up into a holding company, Tikoo Solutions. The company said that Tikoo will continue working with Technology Solutions' management in order to expand the company into new geographies. Technology Solutions has business in 12 states.
Technology Solutions founder John Urso became a co-owner of Tikoo Solutions after the closing of the deal.
9. Groupe Access
Company acquired: Tenet Computer Group
Head count: 15 employees
Annual revenue: $5 million
Purchase price: Not disclosed
Date of announcement: May 12
Two Canadian solution providers have come together to create a powerhouse with expertise in everything from cloud to managed services to product rollouts.
As a result of the deal, Toronto-based Tenet’s existing customers will have access to more expertise around vendors such as Veeam Software and Microsoft. Montreal-based Groupe Access is a Microsoft Gold cloud solution providers and owns its own data center and network operations center (NOC).
The combined company plans to go after new corporate clients in both large enterprise and small business. Tenet has a strong health-care practice, serving many hospitals in the Toronto area.
8. Net@Work
Company acquired: Dresser & Associates
Head count: 11-50 employees
Annual revenue: Not disclosed
Purchase price: Not disclosed
Date of announcement: May 4
Enterprise resource planning (ERP) provider Net@Work -- No. 377 on the CRN 2016 SP 500 -- added Dresser & Associates to the roster of Sage-related acquisitions it has made within the past two years.
The deal boosts New York-based Net@Work's Sage offerings for human resources management. Dresser, which has its headquarters in Scarborough, Maine, was recognized as the top reseller of Sage's HR management systems for the second consecutive year and has been one of the top three HRMS resellers for the past 15 years, according to Net@Work.
Dresser & Associates is the most recent of four Sage-focused Net@Work acquisitions.
7. Accenture
Company acquired: OPS Rules
Head count: 11-50 employees
Annual revenue: Not disclosed
Purchase price: Not disclosed
Date of announcement: May 10
Accenture plans to purchase a consultancy that uses data science to solve complex business problems in the retail, high-tech, life sciences and industrial verticals.
Dublin-based Accenture, No. 2 on the CRN 2016 SP 500, said its acquisition of Waltham, Mass.-based OPS rules will improve its ability to apply machine learning to optimize supply chain, procurement risk and dynamic pricing operations.
OPS will focus on ideas that are two or three steps away from becoming a finalized offering, and will seek to identify ways to bring machine learning to the Internet of Things space.
6. Optiv Security
Company acquired: Evantix
Head count: 11-50 employees
Annual revenue: Not disclosed
Purchase price: Not disclosed
Date of announcement: May 13
Denver-based Optiv dove further into the market for third-party risk services by acquiring Newport Beach, Calif.-based Evantix, a company that produces a Software-as-a-Service application for managing third-party risk.
The Evantix application will add a managed service offering for third-party risk reports, according to Optiv, No. 25 on the CRN 2016 SP 500. That is key for customers as the current process for security assessment of third-party vendors is manual and time-intensive.
The acquisition will allow Optiv to ramp up its practice around third-party security risk by providing a secure delivery platform. This will enable Optiv to accelerate more consistent services.
5. Logicalis
Company acquired: Lantares
Head count: 51-200 employees
Annual revenue: Not disclosed
Purchase price: Not disclosed
Date of announcement: May 19
Slough, England-based IT solution provider Logicalis -- No. 30 on CRN's 2016 SP 500 -- acquired Barcelona, Spain-based Lantares in order to expand its geographic reach and improve its portfolio around analytics and business solutions, the company said.
Lantares specializes in the implementation of both on-premise and cloud-based strategic solutions for corporate performance management and information management and currently holds the highest IBM analytics certification in Spain.
Logicalis CEO Mark Rogers said the acquisition is "strategically important for Logicalis Spain," noting that the purchase will improve his company's abilities in analytics, security and the Internet of Things.
4. New Signature
Company acquired: Dot Net Solutions
Head count: 70 employees
Annual sales: Not disclosed
Purchase price: Not disclosed
Date of announcement: May 3
Washington, D.C.-based systems integrator New Signature continued to grow its Microsoft services empire with its first acquisition in Europe by purchasing London-based Dot Net Solutions.
The deal bolsters New Signature's portfolio in areas like Azure migration and application development. It also gives the company a launch pad from which it can grow its international presence into Europe, a region where New Signature CEO Jeff Tench told CRN Microsoft is making more of an impact.
This acquisition was New Signature's fourth within the past year, after a $35 million capital injection from private equity firm Columbia Capital.
3. CSC
Company acquired: Aspediens
Head count: 80 employees
Annual revenue: Not disclosed
Purchase price: Not disclosed
Date of announcement: May 23
CSC has fortified its cloud and service management consulting superpower status by purchasing a European ServiceNow partner with sky-high customer satisfaction ratings.
The Tysons, Va.-based company, No. 8 on the CRN 2016 SP 500, said its acquisition of Nyon, Switzerland-based Aspediens represents a 20 percent increase in its ServiceNow project base, providing the company with a presence in mainland Europe for the first time.
Aspediens will join CSC’s ServiceNow practice within Fruition Partners, a Chicago-based cloud service management firm that was acquired by CSC in August and is ServiceNow’s largest dedicated global integration partner.
2. PC Connection
Company acquired: Softmart
Head count: 200 employees
Annual revenue: $200 million
Purchase price: Not disclosed
Date of announcement: May 27
Merrimack, N.H.-based PC Connection fortified its Microsoft software volume transaction business by purchasing Downington, Pa.-based Softmart, a 34-year-old solution provider stalwart with well-defined hardware, cloud and Office 365 practices.
Both PC Connection -- No. 21 on the CRN 2016 SP 500 -- and Softmart have Microsoft’s Licensing Solution Provider status, making them two of only a handful of North American Microsoft partners authorized to handle software volume licensing transactions. The deal continues massive consolidation among Microsoft’s 15 or so licensing partners that have faced dramatic declines in profitability in the cloud era.
This was PC Connection's first acquisition in more than five years.
1. CSC
Merger partner: HPE Enterprise Services
Head count: 100,000 employees
Annual revenue: $18 billion
Value of merger for HPE shareholders: $8.5 billion
Date of announcement: May 24
Tysons, Va.-based CSC -- No. 8 on the CRN 2016 SP 500 -- sent shock waves through the solution provider community when it revealed plans to merge with Palo Alto, Calif.-based HPE's Enterprise Services unit -- No. 3 on the CRN 2016 SP 500 -- to create an IT services behemoth with $26 billion in annual revenue.
The combined entity will be run by current CSC CEO Mike Lawrie and will have HPE CEO Meg Whitman serving on the company's board of directors. It will serve 5,000 clients across 70 countries, and is expected to generate cost savings of more than $1 billion in the first year and $1.5 billion every year thereafter.