'Buying FusionStorm reminded me of buying my house' - Computacenter's Mike Norris on US expansion
CEO Norris opens up on the firm's first US acquisition
"I decided I wanted to move to this area 20 years ago. I drove into the area on a Sunday and saw a house being built, which is the one I'm standing in now. I thought ‘yeah I'll buy that', but then I thought ‘No, don't be hasty', and I spent the next four months looking at all the houses that were up for sale, until I came back and bought this one. It's a bit like that, really."
Mike Norris has been far from hasty when it comes to taking reseller giant Computacenter into the US market.
Rumours that a move for FusionStorm could be imminent first came to CRN's attention last year (on 1 October; exactly one year before the deal was announced), but it wasn't a case of FusionStorm or nothing.
"We have looked at a lot of companies - not as many as the houses I looked at, to be honest - and had people over to Hatfield, and we had interesting conversations," he said.
"But we have never made any other offers and we have found this one as the best fit for what we were looking for."
Never an advocate of the buy-and-build strategy, Norris (pictured) has typically favoured organic growth, supplemented by relatively small acquisitions here and there. The acquisition of FusionStorm goes against the grain somewhat, being his largest since a deal for €1.2bn-revenue German reseller CompuNet in 2004.
The acquisition bookends the first, 15-year-long chapter of Computacenter's US adventure, which until recently saw it partner with US businesses to cater for clients across the pond - the largest being CompuCom. However, this strategy shifted in 2015.
"We basically went to our partner and said that we wanted to do this business direct now, and we transferred all the people who were based on our customers' sites to us," Norris explained.
The addition of FusionStorm's employees takes Computacenter's headcount from 650 to 1,000, including a team of 200 in its Mexico City call centre.
Norris was speaking to CRN around four hours before departing for a week-long trip to the US to meet his new employees at FusionStorm's main offices in New York, Boston, Los Angeles and San Francisco ("It's nice and easy to get around," he quipped).
FusionStorm is set to continue under the stewardship of existing CEO Dan Serpico until the end of the year, at which point it will rebrand as Computacenter and start a six-month transition period that will see Serpico hand over the reins to Computacenter's US boss Mike Keogh.
Along with the FusionStorm staff comes the firm's customers - some of which operate only in the US. This creates a new dynamic for Computacenter, which had previously only worked in the US with its European customers needing support in America.
"Our long-term goal is to have the same capability in the US as we have in Europe," Norris explained. "That is mainly because we have a lot of international clients that would like to see us that way.
"Not all our clients - we have UK-only, Germany-only clients as well - but a lot of them are international, and they want to deal with us internationally.
"We are still some way off that, but it materially closes the gap between what we are able to do in the US and what we can do in Europe. By making an acquisition we also pick up some customers and they are important to us now.
"Some of those are international clients and we will try over time to win their business elsewhere on the planet, because of our international capability, particularly in Europe."
Value for money
On announcing the deal, Computacenter said it would pay $70m (£54m) in cash upfront for FusionStorm with a further $20m payable depending on performance, along with $45m towards refinancing the US firm's debt.
Excluding the debt refinancing, the $90m is in line with the eight figures Norris told CRN he wanted to pay for a US firm in July last year.
The CEO was candid when asked if he views FusionStorm as good value for money.
"Look, who knows?" he said. "One thing I do know is that if this is a good deal or a bad deal it won't be because of the price.
"If we make this a successful business and it does well, people will say 'well done', and if it goes wrong people will chastise us. I can't believe there will be a situation where people say ‘oh sh*t, if only you got it for $10m less, it would have been a good deal'. That won't happen.
"You do spend a lot of time negotiating about the last million here and the last million there, but frankly, that will not be the success or failure. We have paid what we paid, it is done, now it's about making a success of what we got."
Click through to view Norris' thoughts on Misco Netherlands, which Computacenter acquired in September
'Buying FusionStorm reminded me of buying my house' - Computacenter's Mike Norris on US expansion
CEO Norris opens up on the firm's first US acquisition
Misco SOS
Just a few weeks before the US announcement, Computacenter threw a lifeline to the last remnant of fallen reseller Misco, snapping up its remaining arm in the Netherlands (Systemax held onto the French business when it sold Misco to Hilco Capital, and has since sold this division to Bechtle).
The €130m (£115m)-revenue business had been considered the jewel in Misco's crown, even before the subsidiaries in the UK, Sweden, Spain, Hungary, and Italy had dropped away.
Whilst still trading, the Dutch business was not in good shape and had endured a torrid time under brief owners Hilco, which acquired the business from Systemax in March 2017, Norris said.
Systemax had initially acquired SCC's Dutch business in 2014, and rebranded it to Misco.
The CEO played down the size of the deal when announcing it in September, but explained it would allow Computacenter to enter an adjacent market.
"We are really pleased," he told CRN. "I think it is a good little business and it's had a really tough time under the Hilco management.
"They have pared back most of the Misco teleselling business and it is almost back to the SCC business.
"I have done a few acquisitions - not big acquisitions, but probably 20 or 25 - and I have never been so welcome. They were so pleased, not just because it was us but because it was another reseller that knows their business.
"We're not going to throw money at it, but we're going to make a sensible return in the long term. I walked in the door and it was literally spontaneous applause; it was ridiculous. They were so happy to be rid of their previous owners."
With this unusually active spell for Computacenter in terms of M&A activity, Norris said that we can expect things to calm down as he and his team work to integrate the two acquired businesses.
However, he did not rule out some smaller moves in the not-too-distant future.
"I'm done for a while now; I have enough to do at the moment," he laughed.
"There are a couple of little things we are looking at, but they are tiny compared with this, and the only reason I tell you this is so that if one of them comes through you can't say ‘but you said you weren't going to do anything!'
"Anything I do now will be small, in the next two years. We need to get this thing tucked away."