What do these 9 acquisitive partners look for in an M&A deal?
CRN spoke with 9 recent channel acquirers to find out what ticks their M&A boxes
Channel partners were busy splashing the cash and snapping up market competitors to bolster headcount, skills and geographic presence in Q1.
After returning from the Christmas break, CRN has covered around 20 M&A deals from vendors, distributors and partners since January 3.
To get a feel for the partner M&A landscape for the year ahead, CRN spoke with nine channel players who have closed deals this year to find out what they look for in an acquisition, and whether to expect anymore in 2024.
SCC
Most recent acquisition: Cloud voice and collaboration services provider Resonate
Rationale: Adding skills and technology
M&A strategy
Graham Fry, MD of collaboration: "About about a year ago we started looking at the marketplace, looking where it was strong across collaboration and digital workplace, and where we had gaps in our portfolio.
"We went through an internal process to look at whether or not to build out. All the stats coming from the analysts showed the opportunities are right now. So we decided that building out was too slow.
"We started looking across the market and we found Resonate and they ticked all the boxes of what we would have wanted to build."
Will you acquire again in 2024?
Christine Olmsted, head of strategy & corporate development: "We will always look at opportunities to bring compelling value propositions to our customers and we never stop looking at companies and thinking about ways to expand our portfolio.
"Will we do another deal this year? I don't know, the year is still young, so maybe," she says.
Although, looking at the deals SCC has done so far as well as the areas it focused its organic investments, Olmstead says it's about bringing more to clients - more services, more capability, more insight, more expertise.
"So what do we want to achieve in 2024? I'd say we would like our customers and potential future customers to see SCC in a new light. As somebody who can add value across their entire technology estate."
What do these 9 acquisitive partners look for in an M&A deal?
CRN spoke with 9 recent channel acquirers to find out what ticks their M&A boxes
Bechtle
Most recent acquisition: Spanish Apple reseller iDoo Tech
Rationale: Expand its presence in the Spanish market
M&A strategy
Konstantin Ebert, COO: "Again in 2024 and beyond, Bechtle will consistently pursue its international acquisition strategy and expand its system house business in Europe. Primarily, we are focusing our M&A activities on markets in which Bechtle is already active with its own entities. In the next two years, we want to grow with a specific focus on Italy, Spain and Poland.
"Even in the countries where we have significantly expanded our market position over the past two years through outstanding companies - particularly in France, the Netherlands and the UK - we are still open to interesting value added reseller or system integrators that complement us regionally, but also in terms of expertise and services.
"Therefore, we are looking for sizable, well-regarded companies with a strong market position.
"It is also crucial to us that the corporate culture aligns strongly. This is a factor that is decisive for good integration. Just to give an example, we have had very good experiences in the UK with Tangible Benefit and ACS. The broad-based conviction among the teams to achieve more together and benefit from each other - for example by sharing best practices or pooling resources efficiently - was crucial for rapid integration."
What do these 9 acquisitive partners look for in an M&A deal?
CRN spoke with 9 recent channel acquirers to find out what ticks their M&A boxes
Advania Group
Most recent acquisition: Norwegian privately owned IT services provider Solv
Rationale: To scale existing services and introduce new ones to clients in Norway
UK M&A strategy
Henrik Foyn-Laukvik, group head of M&A: "We are actively looking to acquire in the UK.
"We're still looking for a value added reseller in the UK.
"We're looking to add capability to capture more share of the customers wallets. Which means that, in everything we do, we want to be a strategic partner and we want to offer a full holistic offering, a one stop shop experience for the customers.
"Right now in the UK that is the missing link. We have great managed services with great professional services. Everybody needs hardware as well, you need server storage in the datacentre. If we're not providing it, then someone else will come.
"That being said we are looking for scale outside of the VAR space as well. It's hard to neglect the massive use of data and the knowledge on how to use data.
"We recognise there are a lot of companies trying to position themselves within AI and data, that's also a space that is interesting for the UK business to look at to further scale and strengthen capabilities."
What do these 9 acquisitive partners look for in an M&A deal?
CRN spoke with 9 recent channel acquirers to find out what ticks their M&A boxes
11:11 Systems
Most recent acquisition: Two Sungard businesses
Rationale: Technology-led
M&A strategy
Dante Orsini, chief strategy officer:
"We're always looking.
"We've been very focused on integration. The strategy was to acquire platform businesses, specifically focused on cloud security connectivity.
"Our real focus there is to make sure that we continue to drive value.
"There's a lot that goes into specific targets, but we walk away from a lot of opportunities. There's certain segments in the market where we just see that the timing is not right.
"I don't know how heavy a year it's going to be for M&A. But if the right opportunity comes along, we're positioned to take advantage of it and that's the good news."
What do these 9 acquisitive partners look for in an M&A deal?
CRN spoke with 9 recent channel acquirers to find out what ticks their M&A boxes
FluidOne
Most recent acquisition: SureCloud Cyber Services
Rationale: Adding new capabilities
M&A strategy and acquiring again in 2024
CEO Russell Horton: "We're looking to buy four businesses a year.
"Our number one thing is businesses that give good customer service because they fit our DNA and early on, the customers will trust them or be open to seeing other services from the group.
"As part of the due diligence, we always survey their top customers. They need to have a high NPS or they won't fit our DNA."
FluidOne's M&A trail follows its strategy to invest in regional IT MSPs to create a branch network for delivered localised services for its SME customers.
This strategy however adapts for different sized businesses, Horton explains.
"I've got a strategy for branch IT networks that serve the sub-200 seat space. And for them, I'm looking for geography.
"I have five branches so far. And I'm looking to increase my geography in the UK by acquiring branch MSPs. Therefore I want half of my acquisitions to be them. It's currently a third of our turnover.
"For example, I'd like to expand our contact centre over Teams. So I have to get contact centre businesses.
"I do IoT, but I'm not doing the software over the top of the IoT. So I'm looking for businesses that do that.
"I have a development team that do Power BI and analytics. But there's other bits in that stack we don't do that I might acquire.
"I have strong skills in Azure, but I might acquire an AWS practice for the customers who have AWS.
"So I'm looking at capabilities in the connected cloud stack in vendors that will complement our customers and make even more customer requirements that we do now."
What do these 9 acquisitive partners look for in an M&A deal?
CRN spoke with 9 recent channel acquirers to find out what ticks their M&A boxes
Conscia
Most recent acquisition: Digital transformation provider ITGL
Rationale: Presence in UK and Irish markets
M&A strategy and acquiring again in 2024
CEO Erik Bertman:
"We are always on the lookout for acquisitions. Over the past ten years we've done 17 and I don't think we'll be stopping in the near future.
"We normally look at two different types of acquisitions either in our core business around networking and cybersecurity, or sometimes in adjacent competencies that we may want to acquire, to be able to accelerate our own growth."
What do these 9 acquisitive partners look for in an M&A deal?
CRN spoke with 9 recent channel acquirers to find out what ticks their M&A boxes
Xperience Group
Most recent acquisition: GCC
Rationale: Entry in London, additional solutions and skills
M&A strategy
Iain O'Kane, CEO: "GCC had business applications as well as managed IT. So we felt their offering complemented our own offering.
"They also had Microsoft rich revenues which gave us access to more skills that we could bring to our business.
"Culturally, the businesses were well aligned in that the way they ran their business and looked at their business was very similar to us.
"And the way they structured the business, we felt that we could integrate it into Xperience reasonably quickly.
"The other area that was of interest was that we had really good east of England presence, and acquiring GCC gave us a presence in London, and also Gloucester which gave us the west of England.
"The summary of that would be the cultures were very closely aligned, the solutions and product sets were well aligned. But we also got increased skills in the Microsoft stack. And then the geographic side of things was a very big thing for us."
Will you acquire again in 2024?
"Our business plan that takes us up to 2027 does see organic growth continuing to achieve high double digits.
"There is M&A baked into our business plan. We're not looking to do multiple acquisitions each year, only one or two."
"We're a service-led business and a people-based business. From the very start of any contact with a potential opportunity, I'm thinking about cultural fit.
"Do I believe the business has the same values as Xperience or do I believe that the people would be the same? Could they work with me and could I work with them?
"I think a lot of founders of businesses want to make sure the business they've founded goes to a company that wants to maximise value, but they also want to make sure that what they've built over the last X amount of years has a legacy.
"There's an emotional attachment with founders. We want to see ourselves as a good home.
"When it comes to new technology and acquiring a skill set to branch into a new product offering, your timing needs to be good.
"If it's too new a technology and it's not widely adopted by your customer base, then you might move too early. So I think acquiring new technical skills is important but will be predicated on the timing and where we think the technology is in its lifecycle.
"And then geography, I think moving from the east of England to west of England we have a really good swathe of territory in GB.
"We might go a little bit more south or north."
What do these 9 acquisitive partners look for in an M&A deal?
CRN spoke with 9 recent channel acquirers to find out what ticks their M&A boxes
CloudClevr
Most recent acquisition: Cheltenham-based MSP Bamboo Technology Group
Rationale: Additional capabilities
M&A strategy
Steve Harris, CEO:
"Bamboo have strong technology capabilities that we were interested in building as part of the CloudClevr offering.
"Connectivity and network services is the history of the company, and it's got some quite deep rooted technical capabilities in that area, fixed and mobile.
"It also has some good communications capabilities and IT skills through an acquisition it made.
"Also they've built from the ground up an organic digital assurance and security practice. So it gives us that advanced security capability alongside the more general IT offerings within the business."
"The strategy has been acquiring businesses that give us capability. Because we've built the business from scratch through acquisitions, the first four were really focused on capability.
"Future acquisitions will probably have further eye on geographic coverage, and will also have an eye on customers."
What do these 9 acquisitive partners look for in an M&A deal?
CRN spoke with 9 recent channel acquirers to find out what ticks their M&A boxes
Aspire Technology Solutions
Most recent acquisition: Managed services provider Cloud Cover IT
M&A strategy: "In March 2022 we secured significant minority investment from LDC, the UK's leading mid-market private equity firm, in a transaction which valued Aspire at £85m.
"Our M&A journey began in December 2023 with the acquisition of Glasgow-based cloud and IT MSP Cloud Cover IT. This strategic move expanded our geographic reach into Scotland, aligning with our vision for broader UK expansion and enhancing our portfolio of cutting-edge technology solutions.
"With LDC's support and the recent appointment of Tom Howard as our chief financial officer, we anticipate driving further growth through strategic acquisitions, broadening both our geography and capabilities.
"Aspire's trajectory has been one of continuous advancement, marked by the addition of over 80 new colleagues during the past year alone. This is an exciting time for us, with high customer retention rates and rapid growth enabling us to invest heavily in our solutions and our people, which in turn we expect to fuel further growth."