Big Mergers In Channel History

The announcement Monday that Dell would buy Perot Systems is one in a string of large buyouts/mergers in recent memory. Here's a look back at some of the biggest deals.

This transaction, involving a vendor buying a services provider, closed toward the end of 2008. The acquisition more than doubled HP's services revenue. HP reported total services revenue of $16.6 billion in its fiscal year 2007, which ended Oct. 31, 2007, while EDS reported total revenue of $22.1 billion in its fiscal year 2007, which ended Dec. 31, 2007. The combined services organizations employed roughly 210,000 people. Since then, HP has reported on a quarterly basis that its services revenue has consistently doubled thanks to the EDS acquisition. Its business spans the globe, covering more than 80 countries. EDS Chairman, President and CEO Ronald A. Rittenmeyer joined HP's executive council and reports to Mark Hurd, HP chairman and CEO.

Here's another deal in which a vendor grew its services side by buying a VAR: IBM bought PricewaterhouseCoopers Consulting for $3.5 billion in 2002 in the aftermath of the Enron scandal. Enron's auditor, Arthur Andersen, collected large consulting fees from Enron. The move hastened IBM's shift from selling primarily computers and software toward a future of increasingly providing IT services to corporate customers. The deal strengthened IBM's competitive advantage in integrating technology with services.

Solution provider Insight bought fellow VAR Software Spectrum from Level 3 Communications for roughly $287 million in cash back in 2006. For about a year prior to the acquisition, Insight had been focused on moving beyond price, availability and product selection to become a trusted adviser to clients. The purchase of Software Spectrum, which specialized in software and mobility solutions for midsize and large companies, fueled Insight's services business. Two years later it shelled out nearly $130 million for Calence, one of the nation's largest independent VARs specializing in Cisco networking solutions, advanced communications and managed services.

CDW scooped up Berbee Information Networks, one of the nation's largest privately held solution providers, in a $175 million cash deal in 2006.



Through the acquisition, CDW dramatically increased the solution provider's enterprise-level IT services and solutions offerings, Berbee's annual revenue for the 12 months preceding the agreement was $390 million, with $22 million in earnings. Until that time, CDW had relied on an inside sales team. The purchase of Berbee gave CDW a field sales force of 300 billable engineers.

This past July, solution provider Core BTS purchased another VAR, Inacom, for an undisclosed sum. The combined company employs some 350 employees at 10 offices in six states in the Midwest and East Coast. Both companies said the merger would provide strategic growth and enhanced customer offerings. Through the deal, Core BTS provided Inacom's customers more expertise in videoconferencing, voice, video and data services. Core is a reseller for Verizon and AT&T, selling bandwidth as well as other carrier-based solutions.

In January of this year, Dell acquired the Microsoft IT consulting and solutions segments of Allin Corp. for $12 million in stock. Approximately 100 employees in those operations joined Dell's expanding services business. The Allin business was attractive to Dell because it helped Dell customers take greater advantage of Microsoft technologies and assisted customers in simplifying their IT environments.