The 10 Biggest Solution Provider M&A Dealmakers Of 2022
From Upstack to Deloitte to Accenture, here were the top MSP M&A dealers in 2022, according to a report from Corporate Finance Associates.
Whether it be more private equity backing, lower interest rates or the fight to gain a competitive edge over the competition, M&A among managed service providers and solution providers was red hot in 2022.
The number of IT services M&A transactions went from 435 in 2020 to 675 in 2021 to 656 in 2022, according to a “Mergers & Acquisitions in the Technology Services Industry in Q4 2022” report put out by Laguna Hills, Calif.-based Corporate Finance Associates. CFA is an investment banking firm with decades of experience in executing mergers and acquisitions in the IT and telecom services industries.
The company with the most M&A deals in 2022 was Dublin, Ireland-based Accenture with 25, followed by The 20 MSP and Upstack with 12, and Converge Technology Solutions and Ernst and Young with 10. The aggregate value of IT service M&A transactions went from $36 billion in 2020 to $72 billion in 2021 to $51 billion in 2022.
“In an effort to avert a pandemic-driven recession, the U.S., Canadian and other governments around the world executed very aggressive fiscal and monetary policies throughout 2020, 2021 and 2022,” John Holland, managing director of Corporate Finance Associates, told CRN. “Those policies provided vast liquidity and unusually low interest rates that fueled M&A transactions during those years to a level vastly above the pre-pandemic level.
“Also, the pandemic propelled certain types of IT services companies, such as the companies that provide unified communications-as-a-service (UCaaS) and cybersecurity solutions for remote workforces,” he added. “Such companies attracted a surge of capital from acquirers in 2021 and 2022.”
With the biggest acquirer being Accenture, Holland believes that the global consulting firm will continue to dominate certain areas of the IT services industry, such as big data and cloud solutions.
Here were the top 10 M&A deal makers in the IT services space in 2022.
New York-based SourcePass acquired six companies in 2022 with the goal to expand its managed services, help desk services, cybersecurity and physical security, professional services and custom web application development to a larger pool of clients.
“Our growth model has two parts,” Ken Varrone, chief product officer for SourcePass, told CRN in July. “We will grow by acquisition. And we will grow organically, which is why we hired our first CRO (chief revenue officer) a couple months ago. Our debt equity play gives us the ability to operate as operators without the politics. It lets us do what we need to do to grow. We’ve seen private equities come in and crush MSPs.”
Some of the companies acquired by SourcePass in 2022 included Wilmington, Del.-based SSD Technology Partners; New York-based Total Technology Solutions; and Easthampton, Mass.-based Suite3.
9. Service Express
Kentwood, Michigan-based Service Express, recognized on CRN’s 2022 Solution Providers 500 list, acquired six companies in 2022 to bolster its hybrid cloud and managed infrastructure services.
Its last acquisition in 2022 was Ohio-based third-party maintenance provider Sherlock Services. The acquisition enhanced Service Express‘ standing third-party maintenance offerings and brought expanded data center solutions to its existing customers.
CRN reached out to Service Express for comment.
Other acquisitions included Connecticut-based IT Solutions Group and New Jersey-based Trident Computer Resources.
Paris-based Capgemini, No. 5 on CRN’s 2022 Solution Provider 500, acquired six companies in 2022 in the cybersecurity, cloud consulting, cybersecurity, MSP and MSSP sectors of the IT industry.
CRN reached out to Capgemini for comment.
Some of the acquisitions included London-based brand design and experience agency Rufus Leonard, Paris-based data modeling and IT consulting agency Quantmetry, Singapore-based Aodigy Asia Pacific and Geneva-based Knowledge Expert, both to expand its Salesforce cloud consulting and low-code application development expertise.
7. NTT Data
NTT Data, the global services arm of Japan-based NTT, acquired eight businesses in 2022 with a focus on digital engineering and digital design.
“This is an area of high growth for us,” Eric Clark, chief digital and strategy officer of NTT Data, told CRN in June. “Nexient’s big growth since we acquired it has been high with our existing client base. So we expect more from our existing clients. The entire portfolio lets us come in and help them with their digital design.”
NTT Data, No. 3 on CRN’s 2022 Solution Provider 500 list, acquired Nexient in 2021 and acquired Vectorform, a provider of digital application development and modernization capabilities, to enhance those offerings.
Other acquisitions include New York-based Postlight and Atlanta-based Aspirent.
London-based Deloitte acquired nine companies in 2022 to grow both its footprint in its staple consulting services and its IT services worldwide.
CRN reached out to Deloitte for comment.
Some of the companies the consulting powerhouse acquired in 2022 were Chilean cybersecurity consulting business Makros; Vancouver, Canada-based Striven Consulting; and Hong Kong-based IT consulting solutions provider Integrated Enterprise Solutions Limited.
5. Ernst & Young
London-based business consulting provider Ernst & Young acquired 10 companies in 2022.
“Accounting firms like, Ernst and Young, have been acquiring lots and lots of IT services companies, and not just in 2022 but before,” said Holland. “Accounting firms are providing professional services, they‘re going into cloud, they’re going into cybersecurity or going into Salesforce. So I think that‘s interesting.”
CRN has reached out to Ernst & Young for comment.
Some of the acquisitions include Germany-based ifb SE to enhance EY’s finance and risk digital transformation services and French consulting service provider Fabernovel.
4. Converge Technology Solutions
Ontario-based IT services provider Converge Technology Solutions, recognized on CRN’s Elite 150 2023 MSP 500 List, acquired 10 companies in 2022, which was a part of its plan to increase revenue by $1 billion per year in 2023.
“We wanted to do eight acquisitions this year. The official acquisition number I think will be 11,” John Teltsch, CRO of Converge Technology Solutions, told CRN in October. “That completes our acquisition commitment to increase revenue by $1 billion in 2022. … The plan is to be about $5.5 billion in revenue through 2025.”
Its strategy was to acquire a mix of companies, some in the education market, in North America and Europe.
Some of the companies it acquired in 2022 included U.K.-based education specialist Stone Technologies Group, San Diego-based Technology Integration Group and Toronto-based Newcomp Analytics.
New York-based solutions provider Upstack, which is listed on CRN’s 2022 Solutions Provider 500 list, acquired 12 companies in 2022 and is well on its way to building an agent mammoth with its scale.
“While we are the largest (agent) today we are still a small business,” CEO Chris Trapp told CRN last year. “We’re proud of that. We are excited about the opportunity. We’ve got a long way to go to be in the Fortune 500. I think we can get there. That won’t happen overnight. But I think we will get there over the next 10 years.”
Some of the acquisitions included Connecticut-based DVP Technologies and Clifton, New York-based telecom company Subsidium Technologies.
“This year is going to be bigger than last year in terms of where we are tracking all of our opportunities and the momentum we have,” Trapp said last year. “It’s a beautiful thing when you invest in highly influential business owners. They attract other highly influential business owners as well. We have benefitted greatly from that and I think this year is going to be more successful than last year. And I think 2023 will be more successful than 2022.”
2. The 20 MSP
Plano, Texas-based managed services provider The 20 MSP acquired six MSPs in Q3 2022 and six more in Q4 2022, with a total of 12 for the entire year.
“For us, four MSP acquisitions is easy to digest in a month,” CEO Tim Conkle told CRN in October. “We’ll probably do two to four acquisitions a month in 2023, or 24 to 48 acquisitions for the year. We’ll do another three or four by year-end this year.”
The company’s goal is to acquire other MSPs and build a nationwide services provider, according to Conkle.
“As for the future, we’re gearing up for a big year,” a spokesperson for the company told CRN an email. “Our multi-year growth plan is still in its early stages, with plenty more M&A deals waiting in the wings. So expect more of the same in the coming months as we continue to acquire operationally mature MSPs from our group, deepening our national footprint and establishing a national MSP with unmatched scale.”
A few of the companies acquired by The 20 MSP include Troy, Ohio-based Cirrus Technologies; Kirkland, Wash.-based Stratocent Technologies; San Antonio-based Monroy IT Services; and Santa Cruz, Calif.-based Network Management Solutions.
After a conservative start in the first half of 2022, with less than 10 acquisitions under its belt, Accenture, ramped up its acquisition spree in the latter half, buying up numerous companies to complement the many facets of its business. The Dublin-based global systems integrator, No. 1 on CRN’s 2022 Solution Provider 500, did go on a massive spree of acquisitions in April, gathering up six companies altogether, and another spree over the summer. And the acquisitions will likely keep rolling in.
“Our strategy for FY23 remains the same, focusing on acquisitions to scale in new markets, gain new capabilities or deepen industry and functional expertise,” an Accenture spokesperson said in an email.
Acquired companies included Barcelona-based Alfa Consulting; Argentina-based Ergo; Brussels-based Greenfish; and Minnesota-based The Stable.