10 Massive M&A Deals Reshaping the Channel: January 2016

Vendor Expertise In High Demand

Partners with practices oriented largely around a single vendor were a hot commodity in January, with five of the 10 biggest channel deals carried out by solution providers seeking an edge with Cisco, Dell, Oracle or Salesforce.

Capabilities in verticals such as financial services and the public sector were in high demand last month, as three of the channel firms swooped up have a pronounced industry focus. Five of the acquired partners specialize in cloud.

Four of the purchased companies are abroad, four are in the Midwest and two are in the Northeast. Seven of the deals were carried out from among the ranks of the 130 largest companies on the CRN 2015 Solution Provider 500.

Acquisitions are ranked based on the total number of employees at the firm being acquired.

10. Davenport Group

Entity acquired: Data Media Solutions customer base

Head count: Not disclosed

Annual sales: Not disclosed

Purchase price: Not disclosed

Date of announcement: Jan. 26

Summary: St. Paul, Minn.-based Dell partner Davenport Group launched a long-term strategy of growth through acquisition by acquiring Omaha, Neb.-based Data Media Solutions' client base in exchange for an ownership stake in Davenport Holding Group.

Davenport expects to cross-sell services into DMS' Dell customers, who today only have access to servers. Davenport, a Dell-only partner, does not plan to continue DMS' partnerships with Hewlett Packard Enterprise, IBM, Lenovo, Oracle, CA Technologies and Symantec.

DMS' customer base is almost exclusively in Nebraska, where Davenport did not have a presence.

9. Open Systems Technologies

Company acquired: Visualhero Design

Head count: 12 employees

Annual sales: Not disclosed

Purchase Price: Not disclosed

Date of announcement: Jan. 26

Summary: Open Systems Technologies boosted its design capabilities by acquiring renowned design consultancy Visualhero Design.

Grand Rapids, Mich.-based OST -- No. 24 on CRN's Fast Growth 150 and No. 126 on the SP 500 -- will be keeping all 12 of Visualhero's employees in their current positions.

OST intends to incorporate Grand Rapids, Mich.-based Visualhero's focus on user experience to help its customers "think differently and respond to the needs of marketing, product development, customer service and other business segments with agility and creativity," according to company CEO Meredith Bronk.

8. Accenture

Company acquired: CRMWaypoint

Head count: 41 employees

Annual sales: Not disclosed

Purchase price: Not disclosed

Date of announcement: Jan. 4

Summary: Dublin-based Accenture -- No. 2 on CRN's SP 500 -- acquired its second Salesforce partner within the past few months by purchasing Netherlands-based CRMWaypoint.

The buy bolstered Accenture's Cloud First agenda by adding all of CRMWaypoint's sales, services and marketing cloud solution specialists to Accenture's applications team. The applications team delivers cloud services for Salesforce, Workday, ServiceNow, Google and other "pure play" technologies.

The deal comes just four months after Accenture bought Salesforce maven Cloud Sherpas, No. 115 on the CRN SP 500. The acquisitions should help position Accenture as a cloud leader providing services across multi-cloud environments.

7. Accenture

Company acquired: Formicary

Head count: 65 employees

Annual sales: Not disclosed

Purchase Price: Not disclosed

Date of Deal: Jan. 7

Summary: Dublin, Ireland-based Accenture invested further in its financial services offerings by acquiring capital technology markets consultancy Formicary.

Formicary, a London-based financial services company, will further improve the solutions that Accenture, No. 2 on the CRN SP 500, is able to provide its online-retail customers in North America and the U.K. The deal will accomplish this by adding Formicary’s 65 Calypso, Murex, Summit FT and Clearing specialists to Accenture's online retail technology offerings.

This acquisition might also be a first step for Accenture towards building a financial services platform that can support Bitcoin transactions for online retailers.

6. Avnet

Company acquired: ExitCertified

Head count: 80 employees

Annual sales: $24 million

Purchase price: Not disclosed

Date of announcement: Jan. 7

Summary: Avnet more than doubled the size of its North American education team by purchasing Ottawa, Ontario-based ExitCertified, a provider of big data, cloud, security and hyper-converged training.

The deal will enable the Phoenix-based distributor to extend existing supplier distribution deals to include training for solution providers as well as offer training around vendors that don’t currently appear on Avnet’s line card.

The acquisition is expected to provide an immediate boost to Avnet’s profitability and achieve the distributor's corporate return-on-capital target of 12.5 percent.

5. Capgemini

Company acquired: Oinio

Head count: 100 employees

Annual sales: Not disclosed

Purchase price: Not disclosed

Date of announcement: Jan. 5

Summary: Consulting, technology and outsourcing service giant Capgemini, No. 5 on the CRN 2014 SP 500, strengthened its competencies around cloud by purchasing Salesforce partner Oinio.

This bolt-on acquisition added employees to Paris-based Capgemini's German and Chinese operations, bolstering its digital growth and building on its capabilities to providing digital transformation services around Salesforce solutions in both countries.

Oinio has become one of the larger European consulting and deployment players for Salesforce's cloud-based CRM and digital marketing solutions, with more than 600 current projects in life sciences, manufacturing and finance.

4. TierPoint

Company acquired: Cosentry

Head count: 220 employees

Annual sales: Not disclosed

Purchase price: Not disclosed

Date of announcement: Jan. 20

Summary: St. Louis-based colocation provider TierPoint, No. 120 on the CRN SP 500, agreed to acquire Omaha, Neb.-based Cosentry, No. 409 on the CRN SP 500, a regional provider of cloud, colocation and managed services.

Cosentry will become a subsidiary of TierPoint and operate under the TierPoint brand. Private equity firm TA, which acquired Cosentry in 2011, will become a "significant investor" in TierPoint, joining six other investors.

Cosentry operates nine data centers in Nebraska, Missouri, Kansas, South Dakota and Wisconsin -- five states where TierPoint does not have data centers.

3. Cognizant

Company Acquired: KBACE Technologies

Head count: 400 employees

Annual sales: Not disclosed

Purchase price: Not disclosed

Date of announcement: Jan. 27

Summary: Teaneck N.J.-based Cognizant, No. 8 on the CRN 2015 SP 500, bought leading Oracle partner Kbace Technologies in order to boost its cloud application capabilities.

Kbace has one of the largest bases of Oracle cloud application customers, according to Cognizant. The company was honored by Oracle annually from 2013 to 2015 as the vendor's specialized partner in North America for implementation of its human capital management applications.

Cognizant said the deal will provide clients with access to "significant platform expertise," pushing the company to the "forefront" of Oracle cloud partners and technology consultants.

2. Presidio

Company acquired: Netech

Head count: 430 employees

Annual sales: $300 million

Purchase price: Not disclosed

Date of announcement: Jan. 6

Summary: New York-based Presidio, No. 21 on the CRN SP 500, acquired Netech, one of Cisco Systems’ top Midwest partners with expertise in cloud, security and collaboration.

The purchase of Caledonia, Mich.-based Netech, No. 107 on the SP 500, is expected to result in real-estate consolidation, more preferred pricing for Netech and its customers, and higher gross profits for account managers at both companies.

Netech customers should be able to tap into Presidio’s cybersecurity, cloud, Internet of Things and managed services business units, while Netech’s physical security offering will eventually be expanded to Presidio customers.

1. Leidos

Merger partner: Lockheed Martin Information Systems & Global Solutions

Head count: 16,000 employees

Annual sales: $4.7 billion

Purchase price: $5 billion

Date of announcement: Jan. 26

Summary: Reston, Va.-based Leidos' proposed merger with Bethesda, Md.-based Lockheed Martin's IS&GS business would create the world’s largest pure-play U.S. government solution provider, with more than 33,000 employees and $10 billion of annual sales.

The combined company -- which is slated to retain the Leidos name -- would harness robust capabilities across the intelligence, defense and civil spaces, and would hold a stronger position in everything from network modernization to aviation modernization.

Leidos is financing the transaction through a $1.8 billion payment to Lockheed Martin and issuing $3.2 billion worth of company stock to Lockheed shareholders.