13 Massive M&A Deals Reshaping The Channel: June 2016

Valuing Vendor Expertise

Solution providers on the prowl for acquisitions last month targeted firms with specific vendor expertise, with four of the 13 acquired firms specializing in suppliers such as Avaya, Cisco, IBM and tier-one telecom carriers.

Security mavens were also in high demand, with four of the 13 purchased companies carving out niches in areas such as data protection, vulnerability research, security breach simulations and cyber forensics.

Six of the 13 acquiring companies can be found in the top 65 of the CRN 2016 Solution Provider 500. Among the acquisition targets, six are based in the South, four are based abroad and three are based in the Northeast.

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

13. Arrow Electronics

Entity acquired: UBM's Technical and Electronics Media Business

Head count: Not disclosed

Annual revenue: $19 million

Purchase price: $23.5 million

Date of announcement: June 3

Arrow Electronics is aiming to seed the market for the Internet of Things (IoT) by purchasing UBM's technical and electronics media business.

The Centennial, Colo.-based distributor said its proposed acquisition of seven UBM publications – including EE Times, EDN and Datasheets.com – will give Arrow an outlet to help educate technical designers and engineers on IoT, as well as cloud, software and data center products.

Arrow said these publications should help non-traditional IT buyers – such as chemists, botanists and industrial designers – identify new technology trends and how to apply these trends to their industry.

12. eFolder

Company acquired: Replibit

Head count: 11-50 employees

Annual revenue: Not disclosed

Purchase price: Not disclosed

Date of announcement: June 1

Cloud storage and business continuity technology provider eFolder acquired one of its technology partners, data protection and disaster recovery software developer Replibit.

Atlanta-based eFolder, which provides hybrid on-premise and cloud-based data protection technology to managed service providers, said the acquisition will give it better control over its intellectual property development.

Orlando-based Replibit is one of five data protection software vendors that provides technology combined with commodity hardware by eFolder in an on-premise data protection solution. The offering is also backed up by eFolder's own 30-TB storage cloud.

11. ManTech

Entity acquired: Oceans Edge Cyber Unit

Head count: 11-50 employees

Annual revenue: Not disclosed

Purchase price: Not disclosed

Date of announcement: June 13

U.S. government powerhouse ManTech purchased Ocean Edge's vulnerability research, development and analysis capabilities business unit in a move that bolsters ManTech's cyberintelligence practice.

The Fairfax, Va.-based company, No. 29 on the CRN SP 500, said its acquisition of the cyber business unit of Reston, Va.-based Oceans Edge will enable the company to better service components of the U.S. Cyber Command.

The acquisition is expected to slightly boost ManTech's profitability in 2016, according to the company. The wireless cybersecurity practice at Oceans Edge focuses on protocol analysis, penetration testing, vulnerability analysis and internal research and development.

10. Tyler Technologies

Company acquired: ExecuTime Software

Head count: 30 employees

Annual revenue: Not disclosed

Purchase price: Not disclosed

Date of announcement: June 1

Plano, Tex.-based government solution provider Tyler Technologies - No. 50 on the CRN SP 500 - acquired scheduling software solutions company ExecuTime Software to boost its enterprise resource planning (ERP) capabilities.

ExecuTime, based in Broken Arrow, Okla., brings its scheduling and time-tracking software to Tyler that is focused on municipal services, local government and public safety agencies.

The solution can be utilized in tandem with the company's other ERP applications to help solve complex scheduling problems for police, fire and public works departments. It currently supports 200 public sector clients across the U.S., many of which are also clients of Tyler.

9. Incedo

Company acquired: SysLogic Technical Services

Head count: 45 employees

Annual revenue: Not disclosed

Purchase price: Not disclosed

Date of announcement: June 14

Rising channel giant Incedo purchased a solution provider that counts two of America's largest telecommunication carriers among its customers.

The Santa Clara, Calif.-based company, No. 447 on the CRN SP 500, said its acquisition of St. Petersburg, Fla.-based SysLogic Technical Services will enable Incedo to provide software, virtualization and cloud orchestration services to tier-1 telecom service providers.

At the same time, SysLogic's existing customers can take advantage of Incedo's product engineering expertise in the communications space, with services focused on development, design, testing and product launches.

8. Fresche

Company acquired: Quadrant Software

Head count: 51-200 employees

Annual revenue: Not disclosed

Purchase price: Not disclosed

Date of announcement: June 9

Montreal-based Fresche acquired Boston-based Quadrant Software to expand the company’s IBM i document management and distribution, application modernization and mobile device capabilities for older server platforms.

The merger pushes the company into becoming one of the largest providers, second only to IBM, of solutions for legacy IBM platforms like AS/400, iSeries, and System i servers, as well as current Power servers.

The IBM i platform has always been robust, which means customers often prefer not to go through the expense of migrating to newer platforms.

7. Accenture

Company acquired: Maglan

Head count: 51-200 employees

Annual revenue: Not disclosed

Purchase price: Not disclosed

Date of announcement: June 20

Accenture boosted the capabilities of its new cybersecurity unit with its acquisition of privately held Israeli security company Maglan.

The Dublin, Ireland-based company, No. 2 on the CRN SP 500, said Maglan will provide increased resources to fight cyber offenses by adding improved security breach simulations, vulnerability countermeasures, cyber forensics and defenses against malware.

Maglan will serve as the core of Accenture's future Israel Cyber Fusion Center in Tel Aviv. It will be a collaborative security-focused site that Accenture is planning to build as part of a global network. Other centers are located in Bangalore, Manila and Prague.

6. Optiv

Company acquired: Adaptive Communications

Head count: 60 employees

Annual revenue: Not disclosed

Purchase price: Not disclosed

Date of acquisition: June 2

Optiv - No. 25 on the CRN SP 500 - purchased Portsmouth, N.H.-based Adaptive Communications, No. 208 on the SP 500, last month.

This is a geographical play to expand Denver-based Optiv's consulting reach in the New England market. When Accuvant and FishNet Security merged into Optiv last year, the Northeast market was a gap in the combined companies' geographic coverage, the company said.

Optiv executives said the acquisition of Adaptive will be ’a great opportunity’ for the company to gain both trust and business from customers in the Northeast region.

5. Carousel Industries

Company acquired: Source Inc.

Head count: 100 employees

Annual revenue: Not disclosed

Purchase price: Not disclosed

Date of announcement: June 27

Carousel has acquired Source to expand its asset management and inventory logistics solution and service offerings.

The Exeter, R.I.-based company – No. 64 on the CRN SP 500 – said the deal enables Carousel to bring its data and networking product and service offerings to customers of Dallas-based Source.

Source is the 15th largest Avaya product dealer in the U.S. and has more than 10,000 customer implementations nationwide. The company's products and services include unified communications, assets management, e911 implementations, disaster recovery, and technology refurbishment and repair.

4. SolarWinds

Company acquired: LogicNow

Head count: 201-500 employees

Annual revenue: Not disclosed

Purchase price: Not disclosed

Date of announcement: June 1

Austin, Tex.-based IT infrastructure management vendor SolarWinds said its acquisition of Dundee, Scotland-based LogicNow will provide it with the strongest and most complete portfolio of automation, security, network management and service management capabilities for MSPs.

SolarWinds will combine LogicNow with its SolarWinds N-Able business, which competed with LogicNow in the market for remote management and monitoring (RMM) technology, to create a behemoth with 20 offices in 11 countries serving some 20,000 MSPs.

The acquisition was backed by a consortium of investors led by New York-based private equity giant Insight Venture Partners. Silver Lake and Thoma Bravo, which acquired SolarWinds in October, said at the time that they planned to increase SolarWinds's investments around cloud, hybrid and MSP environments.

3. Carousel Industries

Company acquired: Atrion

Head count: 300 employees

Annual revenue: $140 million

Purchase price: Not disclosed

Date of announcement: June 8

Carousel bought its fellow Rhode Island solution provider to rapidly scale its nascent Cisco practice and become more of a one-stop shop for customers.

The Exeter, R.I.-based Carousel – No. 64 on the CRN SP 500 – said nearly three-fourths of its 6,000 customers use Cisco products, but until March were unable to procure Cisco products via Carousel.

Atrion – No. 196 on the CRN SP 500 – should be able to fulfill pent-up demand, as the Warwick, R.I.-based company derives half of its revenue from its Cisco business and has a robust product and managed services practice built around the vendor.

2. ManpowerGroup

Company acquired: Ciber Netherlands

Head count: 400 employees

Annual revenue: Not disclosed

Purchase price: $25 million

Date of announcement: June 6

Ciber continued its efforts to divest itself of non-strategic operations, off-loading its Netherlands business to Milwaukee-based ManpowerGroup.

The Greenwood Village, Colo.-based Ciber – No. 43 on the CRN SP 500 – said the move is part of a broader plan to focus on its core business in the IT staffing, implementation, app modernization, consulting and managed services spaces.

Ciber said it is looking to exit businesses with poor-quality revenue, such as those offering low margins, those that are heavily reliant on subcontractors, or those that are more susceptible to litigation.

1. McKesson Technology Solutions

Merger partner: Change Healthcare

Head count: 5,001-10,000 employees

Annual revenue: $515 million

Value of merger for shareholders: $1.25 billion for McKesson; $1.75 billion for Change Healthcare

Date of announcement: June 28

San Francisco-based healthcare giant McKesson, No. 5 on the Fortune 500, said it will be separating itself from its $2.9 billion technology business and merging it with Nashville, Tenn.-based Change Healthcare, creating a new, yet-to-be-named, $3.4 billion health-care solution provider.

The deal is slated to close in the first half of next year. McKesson and Change will own approximately 70 percent and 30 percent of the new company, respectively. The two companies said they would take steps within months of the closing to take the company public, after which McKesson would divest its stake.

McKesson CEO John Hammergren will be chairman of the new company, while Change Healthcare CEO Neil de Crescenzo will remain in the CEO role, McKesson said in a statement.