15 M&A Deals Reshaping The Channel: December 2016
Managed Services Mayhem
Managed services were in high demand last month, with seven of December's 15 acquisitions involving a target that specialized in managed IT, managed printing or managed security services.
Cloud expertise was also a priority, as four of the acquired firms possessed a dedicated cloud practice. Seven of the acquiring companies were in the 2016 CRN Solution Provider 500 rankings, with six of those firms in the top 50.
The acquired companies employ more than 5,500 combined. The firms are pretty geographically dispersed, with three each based in the Midwest, West Coast and abroad, and two each based in the Northeast, South and Canada.
The acquisitions are ordered on the following slides based on the total number of employees at the acquired companies.
15. QRX Technology Group
Company acquired: Kerr Norton
Head count: Not disclosed
Annual revenue: Not disclosed
Purchase price: Not disclosed
Date of announcement: Dec. 1
QRX Technology Group acquired fellow Canadian solution provider Kerr Norton to strengthen its position in the IT equipment, supplies and service market.
Kerr Norton has become an important player in the computer supplies industry through 20-plus years of experience in recycling and remanufacturing cartridges. The Vaughan, Ontario-based company carries some of the most prominent vendors in the industry, including Hewlett Packard, Lexmark, Xerox, Canon, Brother, Maxell, Ricoh and Samsung.
QRX offers a selection of ink/toner, media and paper products, and provides printing and imaging equipment sales, services and all-inclusive managed print services.
14. Kite Technology
Merger partner: AIS Technology
Head count: 10-50 employees
Annual revenue: Not disclosed
Purchase price: Not disclosed
Date of announcement: Dec. 29
Managed service provider Kite Technology boosted its geographic reach across the country by merging with AIS Technology.
For Ownings Mills, Md.-based Kite, the merger will expand its reach far beyond the company’s traditional stomping ground in the mid-Atlantic states to include AIS’ 22-state footprint.
Following the close of the deal on Jan. 2, the merged company adopted the Kite name. The entity is now owned by Kite Technology Group CEO Greg DiDio, AIS owner and President Nick Oliver and Kite Technology Group founder Jeff Kite.
Oliver joined Kite Technology as an executive vice president.
13. HostedBizz
Company acquired: ITUtility.net
Head count: 11-50 employees
Annual revenue: Not disclosed
Purchase price: Not disclosed
Date of announcement: Dec. 1
Canadian Infrastructure-as-a-Service provider HostedBizz bought cloud solution company ITUtility.net to help accelerate the company’s growth.
ITUtility.net brings expertise around Microsoft cloud business applications to the table, including Exchange, SharePoint, Skype for Business and Dynamics. Both HostedBizz and ITUtility.net are based in Ottawa, Ontario.
"We are very pleased with this acquisition," said Paul Butcher, co-founder of HostedBizz, in a statement. "The addition of the ITUtility.net product portfolio is a strategic move that builds on our momentum as Canada's fastest-growing cloud IT provider and provides our customers with a fully integrated and professionally managed service for all of their IT infrastructure needs."
12. Contegix
Company acquired: Admo.net
Head count: 11-50 employees
Annual revenue: Not disclosed
Purchase price: Not disclosed
Date of announcement: Dec. 13
Contegix acquired hosting services provider Admo.net Web Services to increase its customer base, data center resources, cloud computing and hosting capabilities.
The acquisition was funded by private equity firm Strattam Capital and will expand the reach of St. Louis-based Contegix into the market around Admo’s Kansas City, Mo., headquarters. It will also add 60 more customers to Contegix’s 700-strong client base.
This deal was unveiled only weeks after Contegix added its first-ever managed services offering through a merger with MSP Distributed Systems Services, scooping up the Reading, Pa.-based MSP with funding from Strattam, which bought a controlling share of Contegix in early November.
Strattam Capital appointed former DigitalGlobe senior vice president David Turner as the company’s new CEO and appointed founder and former CEO Matthew Porter to the role of vice chairman in November.
11. ePlus
Entity Acquired: Consolidated IT Services
Head count: 55 employees
Annual revenue: $55 million
Purchase price: Not disclosed
Date of announcement: Dec. 6
Solution provider ePlus Technology acquired the IT services equipment and integration business of Consolidated Communications Holdings to expand its geographic reach in the Upper Midwest.
Consolidated IT Services, based in Minneapolis, is a Cisco Gold partner and the acquisition helps fellow Cisco partner ePlus of Herndon, Va., No. 34 on the 2016 CRN Solution Provider 500, grow its practice around that vendor's products.
Consolidated IT Services is a part of Mattoon, Ill.-based Consolidated Communications, No. 44 on the 2016 CRN Solution Provider 500. The company has Cisco Master Cloud Builder, Master Managed Services and Advanced Data Center certifications.
10. TekLinks
Company acquired: Guidant Partners
Head count: 60 employees
Annual revenue: Not disclosed
Purchase price: Not disclosed
Date of announcement: Dec. 7
TekLinks significantly strengthened its position in the fast-growing Nashville, Tenn., market by acquiring its toughest competitor there – Guidant Partners.
The acquisition by Birmingham, Ala.-based TekLinks, No. 174 on the 2016 CRN Solution Provider 500, increases the company's Nashville revenue by 50 percent in one fell swoop. Some 90 percent of Guidant Partners' revenue is recurring-revenue-services-based, the company said.
Guidant Partners is widely recognized as one of the top MSPs in the Tennessee market. The company provides 99.97 percent uptime and 98.9 percent service-level agreement resolution, and specializes in the health-care and financial verticals.
9. Columbus
Company acquired: Cambridge Online Systems
Head count: 71 employees
Annual revenue: $7.1 million
Purchase price: Not disclosed
Date of announcement: Dec. 1
Columbus acquired a leading IT services company specializing in ERP, CRM and the cloud to increase its footprint in the Microsoft 365, cloud and Office 365 businesses.
Copenhagen, Denmark-based Columbus said the joint entity will be among the leading value providers of digital business services to companies within the U.K.'s manufacturing, retail distribution and food verticals.
Waterbeach, U.K.-based Cambridge Online will continue as an independent company, with current Managing Director David Crabb leaving the company. Columbus U.K. Managing Director Mary Hunter will take over the Cambridge Online Systems managing director position.
8. Vaco Healthcare
Companies acquired: Greythorn, Pivot Point Consulting
Combined head count: 93-132 employees
Annual revenue: Not disclosed
Purchase price: Not disclosed
Date of announcement: Dec. 7
Consulting firm Vaco Healthcare acquired two West Coast consulting firms to strengthen its health-care IT division.
The two companies, Pivot Point Consulting and Greythorn, based in Seattle and Bellevue, Wash., respectively, will bolster Vaco's expertise in EHR implementation, training, optimization, legacy and go-live support, project management and strategic advisory services.
Following the acquisitions, the company’s health-care services division consists of more than 50 employees and 250 consultants across the nation.
7. Cognizant
Company acquired: Adaptra
Head count: 100 employees
Annual revenue: Not disclosed
Purchase price: Not disclosed
Date of announcement: Dec. 16
Cognizant plans to make its second acquisition since an activist investor called for a shake-up, agreeing to buy an Australian consultancy specializing in the insurance vertical.
Teaneck, N.J.-based Cognizant, No. 7 on the 2016 CRN Solution Provider 500, said its purchase of Sydney, Australia-based Adaptra will strengthen its insurance, business transformation and platform capabilities. Adaptra implements platforms such as Guidewire to help insurance companies drive improvements across areas such as underwriting, policy administration, claims management and billing.
Adaptra works with five of the top 10 insurers in Australia and New Zealand, providing them with platform advisory and implementation services and helping them define their target business and operating models.
6. M/C Partners
Companies acquired: Corporate IT Solutions, Thrive Networks
Combined head count: 102-400 employees
Annual revenue: Not disclosed
Purchase Price: Not disclosed
Date of announcement: Dec. 7
Private equity firm M/C Partners bought two solution providers last month and merged them into a new entity that operates under the Thrive Networks name.
The merger ties together Tewksbury, Mass.-based Thrive Networks and Norwood, Mass.-based Corporate IT Solutions, creating an East Coast managed solutions heavyweight.
Following the deal, the former owners of Thrive Networks and Corporate IT solutions assumed roles as investors in the new entity.
M/C Partners expects this merger to be the first in a series of acquisitions that will enable Thrive Networks to penetrate additional geographic markets on the East Coast.
5. SS&C Technologies
Company acquired: Conifer Financial Services
Head count: 201-500 employees
Annual revenue: Not disclosed
Purchase price: $88.5 million
Date of announcement: Dec. 15
SS&C Technologies said it can now provide a wider array of services to outsourced CIO portfolios thanks to its purchase of Conifer Financial Services.
The Windsor, Conn.-based company, No. 36 on the 2016 CRN Solution Provider 500, strengthened its market position on the West Coast through its acquisition of San Francisco-based Conifer. Becoming part of SS&C will allow Conifer to accelerate its growth plans and pace of innovation, according to the 27-year-old company.
Conifer's senior management will continue to lead the business, according to the company. Conifer has 200 clients worldwide representing $110 billion of combined assets under administration, and offices in New York, Singapore and Nova Scotia.
4. ManTech
Company acquired: Edaptive Systems
Head count: 250 employees
Annual revenue: Not disclosed
Purchase price: Not disclosed
Date of announcement: Dec. 19
U.S. government powerhouse ManTech plans to pursue more IT business with the Centers for Medicare & Medicaid Services by purchasing Edaptive Systems.
The Herndon, Va.-based company, No. 29 on the 2016 CRN Solution Provider 500, said its acquisition of Owings Mills, Md.-based Edaptive Systems will allow it to double down on opportunities in the federal health-care space.
Edaptive was founded in 1999, and provides agile software development, testing and automation, business intelligence, data abstraction and IT services. The company is currently the prime contractor on 19 major deals totaling more than $500 million in life-cycle value, and has delivered more than 40 projects since its founding.
3. Accenture
Company acquired: Arismore
Head count: 270 employees
Annual revenue: Not disclosed
Purchase price: Not disclosed
Date of announcement: Dec. 19
Accenture's push to build a $1 billion security practice continues unabated with the company unveiling plans to purchase a French company specializing in identity and access management.
The Dublin, Ireland-based company, No. 2 on the 2016 CRN Solution Provider 500, said Arismore will bolster Accenture's skills around security services, enterprise architecture and change management services. The deal is Accenture's eighth security-focused acquisition in the past 16 months, and follows three high-profile hires for the company's new, dedicated security practice.
Saint-Cloud, France-based Arismore, founded in 2002, provides security and enterprise architecture services for enterprise firms in the telecommunications, media, distribution, energy, transportation, banking and insurance verticals.
2. KKR
Company acquired: Optiv Security
Head count: 1,700 employees
Annual revenue: $947 million
Purchase price: Not disclosed
Date of announcement: Dec. 6
Security solution provider giant Optiv Security is changing private equity hands, with KKR purchasing a majority stake in the company from private equity firm Blackstone Group.
KKR will add Optiv to an $18 billion portfolio that includes information security companies such as Darktrace, Ping Identity and Cylance. While Blackstone will maintain a minority interest in Optiv, company CEO Dan Burns said becoming part of KKR will enable Denver-based Optiv, No. 25 on the 2016 CRN Solution Provider 500, to better help global customers address a full range of cyber-risk and security needs.
Optiv executed three acquisitions of its own in 2016.
1. Consolidated Communications
Company acquired: FairPoint Communications
Head count: 2,600 employees
Annual revenue: $830 million
Purchase price: $1.5 billion
Date of announcement: Dec. 5
Consolidated Communications plans to purchase FairPoint Communications to deepen its fiber footprint in northern New England.
The Mattoon, Ill.-based company, No. 44 on the 2016 CRN Solution Provider 500, said its proposed acquisition of the, Charlotte, N.C.-based company will create a network that extends across 24 states and add more than 3,000 lit buildings. The deal is subject to federal and state regulatory approvals, and is expected to close by mid-2017.
FairPoint employs 2,600 and owns more than 17,000 route miles of fiber in northern New England. The company said it supports next-generation mobile and cloud-based communications such as small cell wireless backhaul technology, Voice over IP, data center co-location services, managed services and disaster recovery.