ScanSource’s MicroAge Deal Aims To Expand Services, Drive Partner Revenue Growth: CEO

‘We expect to continue to add more fuel to [MicroAge’s] business, and then the end game is how do we take their services and offer them to the rest of our channel partners. And that’s part of what I would call the post-closing strategy. It’s not really an integration. It’s more how do we take their existing services and in some cases hardware and sell them through our channel of solution providers,’ says ScanSource Chair and CEO Mike Baur.

ScanSource CEO Mike Baur told CRN that his company hadn’t initially known that MicroAge was for sale by its private equity partner, but that ScanSource jumped at the opportunity to acquire it.

“The end game is how do we take their services and offer them to the rest of our channel partners,” he said. “And that’s part of what I would call the post-closing strategy. It’s not really an integration. It’s more how do we take their existing services and in some cases hardware and sell them through our channel of solution providers.”

The company reported on Thursday fourth fiscal quarter 2026 revenue growth of 17 percent and also unveiled its planned acquisition of MicroAge.

Baur said that MicroAge has a long history of providing services to the end-user community, making its acquisition a key move in his company’s convergence strategy of bringing IT services to its traditional telecom channel community.

“[MicroAge] came out of the pure VAR world, if you will, back in the day, and developed a really nice services strategy and offering, and so they know what it takes to take a pure hardware reseller company like many of our traditional barcode VARs and help them move to higher margin, higher growth technologies like AI and data centers,” Baur said.

[Related: ScanSource Bets $220.5M On MicroAge To Supercharge Its Channel Convergence Play]

Baur also said that MicroAge brings some technology vendors that ScanSource has not worked with before. One of them is Dell Technologies, which recently changed its distribution strategy by ending its relationship with Arrow ECS and expanding its D&H relationship.

“Whether that allows us down the road to benefit from that on the distribution side is not important to us today,” he said. “But it will allow us to build a relationship with the Dell team over time.”

In its fiscal fourth quarter 2026, which ended June 30, ScanSource reported a 17 percent revenue growth. Stephen Jones, ScanSource senior executive vice president and chief financial officer, told CRN that most of that growth came from the company selling more products and services, and not from the increased cost of products and components.

“Picking out what exactly price impact has is really difficult for us and probably a lot of other distributors in our space,” Jones said. “What we said was the majority of our growth came from volume demand.”

There’s a lot going on at ScanSource. To learn more, read CRN’s complete conversation with Baur, which has been lightly edited for clarity.

The big news is ScanSource’s $220.5 million acquisition of MicroAge. What’s going on there?

As you probably know, these guys have been around for decades. Actually, we weren’t necessarily looking to acquire a company exactly like MicroAge, but they were put up for sale. We were looking for a services-rich company that we could take their services—managed services, professional services—to offer more services to our channel partners. We have been looking for about a year now. And MicroAge came into our view, and we’re like, ‘Wow, why not MicroAge?’ They came out of the pure VAR world, if you will, back in the day, and developed a really nice services strategy and offering, and so they know what it takes to take a pure hardware reseller company like many of our traditional barcode VARs and help them move to higher margin, higher growth technologies like AI and data centers.

[So] we did not know MicroAge was for sale. We were looking at companies that had a strong MSP or services offering, and when we found out that MicroAge was for sale, we said, ‘Wow, I haven’t really kept up with them in years.’ And so anyway, that’s what happened. OK, they were put up for sale.

Why was MicroAge for sale?

Like most companies owned by private equity for four, five, or six years, at some point, the PE guys want to exit.

Is MicroAge a profitable organization?

Oh yeah. These guys have really put together a nice story from where they were 50 years ago to where they are today.

When does the acquisition close?

In our press release, we said it would be closed by the end of our Q1. We just announced Q4. We started Q1 on July 1. So by the end of September, we’ll finish Q1 and then thereafter announce our results, which will be early November.

What are the integration plans for MicroAge?

We didn’t really talk about integration plans because that really wasn’t the story. The story was more about making sure MicroAge continues to operate very successfully, and they basically have a great plan on their own, independent of ScanSource, to continue to be very profitable and be a strong top-line revenue growth company. And so we expect to continue to add more fuel to their business, and then the end game is how do we take their services and offer them to the rest of our channel partners. And that’s part of what I would call the post-closing strategy. It’s not really an integration. It’s more how do we take their existing services and in some cases hardware and sell them through our channel of solution providers.

The big question is, MicroAge has its own services business, and now you want to roll some of those services out to your other channel partners. What about the possibility of channel conflict here?

In the scheme of things, MicroAge in the United States, which is where they operate, has a very small market share. We compared their client list with the clients sold through our typical channel partners, and there’s very little overlap. [And] what they sell into an end user today is different than what our channel partners sell as a primary strategy. So, for example, MicroAge might be calling on an enterprise to sell data center technology where we’ve got a traditional security solution provider selling security cameras. They both can be in the same end user with no channel conflict because our channel historically has been very specialized in what they offer, and so they’re not trying to sell across all these other technologies. And we think, and the research shows, that most end users are dealing with six different partners on a regular basis on the channel.

But based on our previous conversations, it seems you wanted to make IT services a bigger part of your sales going forward, bringing them to your existing telecom partners, but also do more on the IT side. That’s why the question about possible channel conflict comes up.

You’re right. We decided to get it going faster. We could buy a services company and we can then be the arbitrator of any channel conflict. So, for example, if we have an existing channel partner that’s working with an end user and a MicroAge salesperson shows up, we can help decide who really was there first and who is providing value. … And remember when we bought [technology advisor] Resourcive a couple years ago? We had the same early questions, and we’ve had only a very small handful of issues where someone said, ‘Hey, I think I’m competing against the company you own,’ and in those cases, we were quickly able to determine we would back out because the market is so big, we don’t need to win those deals.

What’s the biggest takeaway from the fourth fiscal quarter 2026 financials?

Seventeen percent [revenue] growth, man.

How’d that happen?

Hey, we’re good. We’re beating the competition. Clearly there’s strong demand across all of our technologies like we haven’t seen in a while, and we believe some of that demand has been somewhat pent-up demand, if you will. But we also believe that our team is executing better now than they were in the first half of our fiscal year. When we entered the last fiscal year back in August, we talked about the first half versus the second half of our year, and we knew the second half needed to be better than the first half. But we were disappointed with the first half, and it made us cautious going into the third and fourth quarter with our estimates. And so we just did better. We executed better than we thought we could do.

How has the move to bring more IT services to your telecom partners gone so far outside of the acquisition of MicroAge?

We announced last quarter this Converge Communications team, and that is the group that is spearheading this. And they had a great quarter. We don’t break out their results financially at this stage, but we have evidence that partners, whether they’re VARs wanting to sell recurring revenue, or agents, which is sometimes what I call trusted advisors or the TAs selling hardware in the Intelisys channel, are starting to sell edge devices. And what I mean by edge devices, just so you’ll know what we’re talking about, are things like AudioCodes or Jabra headsets, things that are relatively easy for a trusted advisor, an agent, to sell. We’re seeing good traction from both sides of that group, both the traditional solution provider that used to be just a VAR, and the trusted advisor that used to sell just as an agent. We are seeing good uptake in interest from both sides.

What’s next in terms of pulling together or converging these two channels? What’s on the roadmap there to make that happen?

I think we’re doing all the right things. I believe a lot of this is going to be us providing the confidence in both our teams that we can do this, and confidence in these partners that if you try it, we think you’re going to like it, and we think you’re going to make more money if you do this. So it’s going to become, how can we help the channel grow by adding additional offerings while trying to not get them too far out of their swim lanes. I think there’s going to be some products and services that will be harder and more difficult for someone to sell in their first year doing this. So we’re going to have to build this.

ScanSource is starting its new fiscal year. What are your big priorities for fiscal 2027?

Well, you know, one of the themes that we talk the most about with our investors is this idea of 6 [percent] to 10 percent growth in our guidance for the year, so having a number like 10 percent as a possibility for the year of top line growth is really the story. We believe that we can grow the top line revenue 6 [percent] to 10 percent coming up this year. And by the way, I’m talking about these numbers without the acquisition of MicroAge. Just the way we did it last year when we ended the year at 6 percent growth for the year. Actually, 6.2 percent growth. We think we can do that again, and we --believe that we’ll be taking market share.

One interesting move in the distribution space is Dell Technologies’ decision to end its distribution relationship with Arrow ECS and expand its relationship with D&H via a new enterprise storage relationship. Was ScanSource part of Dell’s request for proposal that led to the distribution change?

We haven’t really talked about Dell as a provider, so I really can’t comment. I will let you know this, though. It’s interesting you bring up Dell. Dell is one of MicroAge’s preferred suppliers, and they’ve done a fantastic job reselling Dell into the marketplace. So we’re excited that they are an important partner of Dell’s. Whether that allows us down the road to benefit from that on the distribution side is not important to us today. But it will allow us to build a relationship with the Dell team over time.

Anything else we need to know about ScanSource?

We have a couple of conferences coming up. In September, we have our Partner First conference coming up in Nashville. And then we have our Intelisys event coming up as well. So within 60 days, we’ve got two huge conferences where we’ll be able to get feedback from our channel partners about the MicroAge acquisition and help them develop better plans for growth for next year. We’re investing a lot of time in reaching out to our partners over the next 60 days.

I’m sure your marketing team rolled their eyes when they heard that ScanSource acquired MicroAge, and now they have to go back and completely change the agendas and topics. …

They love this kind of stuff, Joe. Man, they are thrilled.