The 15 Biggest MSP, Solution Provider M&A Deals In 2023 (So Far)
‘Managed service providers have recurring revenue, they’re considered safe even in a recession because the MSPs really wrap their arms around their clients,’ says John Holland, managing director of Corporate Finance Associates.
So far in 2023 there has been a drop in M&A deals, but the market is still ripe for certain acquisitions.
“What we’re seeing in 2023 is a return to pre-COVID. It’s not a crisis or anything, it’s just really returning to pre-COVID levels,” John Holland, managing director of Corporate Finance Associates, told CRN. “Eventually, interest rates go up and the credit conditions tighten. The party can’t go on forever.”
Laguna Hills, Calif.-based Corporate Finance Associates is an investment banking firm with decades of experience in executing mergers and acquisitions in the IT and telecom services industries.
Despite the drop, some businesses, including MSPs, solution providers, telecom and cybersecurity companies, were not affected. There was, however, an absence of mega deals.
“Managed service providers have recurring revenue, they’re considered safe even in a recession because the MSPs really wrap their arms around their clients,” Holland said.
Now that conditions are tightening and interest rates are rising, acquirers are being more selective, according to Holland. They’re searching for particular types of IT services companies that they think are more attractive by offering more growth potential.
Businesses that are riskier in this economic climate are VARs as they work on a project-by-project basis and typically have lower margins, he said. However, a “very safe” category is resellers that sell to the government because the government continues to buy, whether there is a recession or not.
One such company that continues to land M&A deals is Dublin, Ireland-based Accenture, which has acquired eight companies so far in 2023. Another is The 20 MSP, which has acquired seven.
While many companies are being strategic, a handful only acquired one to two companies, but that could change.
“Banks are just more conservative lenders,” Holland said. “So non-bank lenders are very conservative now too. They’re only going to provide a loan for an acquisition if it’s a quality company that’s being acquired. That just has the effect of eliminating M&A transactions of businesses that are not rock-solid. I think that we’re going to see this state of M&A for a little while. It could be another quarter, it could be the rest of the year. That’s hard to say.”
From New Charter Technologies to Coretelligent to Intelligent Technical Solutions, here are the 15 biggest MSP and solution providers M&A deals in 2023 so far.
15. Fresche Solutions
Montreal, Canada-based Fresche Solutions acquired Westchester, Ill.-based Silveredge Consulting in February to expand application support services and ERP capabilities.
14. IT Voice
One a cquisition
Birmingham, Ala.-based IT Voice is backed by private equity firm Baymark and acquired acquired Nashville, Tenn.-based Bytes of Knowledge in January, marking its 16th acquisition in three years.
“Building a great team takes time but we kind of found this secret hack where we can merge other great teams into ours, bridging decades-old relationships into a fast-growth strategy,” CEO Will Slappey said in a statement. “Every company we acquire excels in providing ‘hometown service’ and when you couple that with our ‘world-class technology’ approach, it creates this powerful value for our customers.”
Pittsburgh, Pa.- based Magna5, which is a member of the Elite 150 segment of CRN’s 2023 MSP 500 list, is backed by private equity firm Newspring Holdings and acquired the U.S. operations of Apogee IT Services.
“The demand for managed IT services continues to grow rapidly and adding Apogee’s skilled team will enhance our combined services delivery experience for customers in two of our core regions,” said Robert Farina, CEO of Magna5, in a statement.
One a cquisition
Cranbury, N.J.-based Integris is backed by private equity firm Frontenac. In January it acquired San Angelo, Texas-based CalTech, marking its third acquisition in six months.
Needham, Mass.-based MSP Coretelligent, backed by private equity firm Norwest Equity, acquired Roswell, Ga.-based NetCom Systems in February.
“Through the acquisition of NetCom, Coretelligent has effectively enhanced its services and further strengthened its commitment to delivering the highest-quality service,” Kevin J. Routhier, Coretelligent founder, president and CEO, said in a statement. “ This acquirement is a mutually advantageous arrangement
that benefits our shared clients and provides our current and new team members with abundant opportunities.”
10. New Charter Technologies
Two a cquisitions
Denver-based New Charter Technologies, backed by private equity firm Oval Partners, has acquired two MSPs so far in 2023. The first is Escanaba, Mich.-based DS Tech followed by Mooresville, N.C.-based Biz Technology Solutions.
DS Tech “fits the New Charter profile of best-in-class MSPs in so many ways,” New Charter Technologies CEO Mitch Morgan said in a statement. “They have a very strong commitment to client satisfaction and a focus on excellence in all that they do. We believe that New Charter represents a great home and offers a growth path to their outstanding group of tenured employees.”
Morgan also said in a statement that Biz Tech “has a variety of enhanced services capabilities that we will be able to take across our growing platform.”
9. The Riverside Company
Merged two MSPs
Private equity firm The Riverside Company merged two MSPs, Grand Junction, Colo.-based ProVelocity and Houston-based IronEdge.
“The MSP market is an attractive area for a roll-up strategy given the highly fragmented market, positive industry tailwinds and benefits of scale,” Loren Schlachet, Riverside Micro-Cap Fund managing partner, said in a statement.
“ProVelocity and IronEdge are synergistic businesses, and we look forward to supporting their growth.”
Sterling Heights, Mich.-based MSP Centaris completed two acquisitions in 2023. It acquired Rochester Hills, Mich.-based VisiCom Services in January and Novi, Mich.-based Network Source One in March.
“We are looking forward to growing our organization organically and through mergers and acquisitions,” Curtis Hicks II, president and CEO of Centaris, said in a statement. “Centaris will continue to look for other quality organizations in Michigan to add to our growing portfolio.”
Two a cquisitions
Portsmouth, N.H.-based Greenpages has made two acquisitions in 2023 so far. In February is acquired Middleton, Mass.-based cybersecurity, risk advisory and compliance consulting services firm Arcas Risk Management as well as Toronto, Canada-based infrastructure automation, cloud and DevOps services company Zanaris.
New York-based Upstack has made two acquisitions so far in 2023. In March, it acquired Boca Raton, Fla.-based The Monaco Group and the network and cloud sourcing business of Roseville, Calif.-based LinkSource Technologies.
Two a cquisitions
Netherlands-based Xebia made two M&A deals in 2023. In January it merged with Warsaw, Poland-based GetInData, which delivers cutting-edge big data, cloud, analytics and ML/AI solutions. In February it merged with Xpirit Belgium to help both companies take on projects and seize international opportunities as one.
Three a cquisitions
New York-based professional services firm EY has acquired two MSPs so far in 2023. It acquired India-based Eborn Consulting in January, Paris-based supply chain management consulting firm Adameo in March, and whyaye, a U.K.-based consulting services provider for the ServiceNow platform, in May.
3. Intelligent Technical Solutions
Five a cquisitions
Intelligent Technical Solutions is backed by private equity firm Tower Arch Capital after a partnership between the two companies was unveiled in July 2022.
In the first quarter of 2023, ITS acquired five MSPs, including Tempe, Ariz.-based Granite Computer Solutions, Olympia, Wash.-based BrightWire Networks, Phoenix-based Ox Power Computing Service, Reno, Nev.-based ProTechnical and Sacramento, Calif.-based A Leap Ahead IT.
“Over the past several years, we have developed strong relationships with the founders of each of these companies,” Tom Andrulis, CEO of ITS, said in a statement. “I have great respect for the organizations they have built, and we are excited to be formally partnering with them. As a collective team, our priority is to continue providing best-in-class IT services to our customers. Looking forward, we are well capitalized with the support of Tower Arch Capital to continue
growth through acquisition as well as investing in new and existing locations and services.”
2. The 20 MSP
Seven a cquisitions
The 20 MSP has acquired more than 20 MSPs since 2022, with seven alone in 2023.
Plano, Texas-based The 20 MSP acquired Addison, Texas-based Dallas Network Services and Oklahoma-based Integrated Business Technologies in February; Charleston, S.C.-based Integrated Technology Services in March and Kansas City, Kan.-based UNI Computers, Naples, Fla.-based CyberSecure IT Solutions and Oklahoma City, Okla.-based The Computing Edge in April. Its most recent acquisition of Calabasas, Calif.-based Computer Support Team was unveiled May 5.
“All these acquisitions are strategic in the sense of new markets and new expansion,” Tim Conkle, The 20 MSP CEO, told CRN in April. “I think we’ll start to see
probably 12 months out where we buy in the same markets and just stack on top and then start scaling those markets out.”
Dublin, Ireland-based solution provider powerhouse Accenture has acquired eight companies in 2023 so far. In January it completed its acquisition of Bellevue, Wash.-based Inspirage, an integrated Oracle Cloud specialist firm, and acquired SKS Group, a consulting firm that helps banks across Germany, Austria and Switzerland modernize their technology infrastructure.
In February it acquired New York-based Bionest and Fortaleza, Brazil-based Morphus. In March, it acquired Paris-based Optimind and Bangalore, India-based Flutura. In April it acquired Oslo, Norway-based Einr AS. In May it acquired Coventry, U.K.-based Objectivity.