Channel M&A: 10 Key Deals Among Microsoft Partners in 2010
It was no 2009, but 2010 was a tough year nonetheless. A continuing slow economy and the growing maturity of IT markets helped drive some of the 400,000 members of the Microsoft Partner Network together in 2010. Some merged for shelter, others to seize opportunities. A look back at 10 of the more interesting mergers and acquisitions to hit the Microsoft channel this year highlights some trends. A few were large deals involving hundreds of employees and millions of dollars. Most involved small or high-profile partner companies that illustrate deeper trends in the channel. The deals are presented chronologically by announcement date.
Aspect Acquires Quilogy Inc.
Aspect is a Microsoft-focused unified communications and collaboration services company with more than 1,600 employees based in Chelmsford, Mass. Quilogy Inc. was a St. Louis, Mo.-based Microsoft National Systems Integrator (NSI) with specialized practices in SharePoint and Dynamics CRM. The merger combined the services areas and brought 90 percent of Quilogy's 250 employees to Aspect.
"Quilogy’s expertise in Microsoft SharePoint and the broader collaboration space, coupled with Aspect’s global unified communications leadership and strategic equity alliance with Microsoft, are a formidable combination in the enterprise technology market," Aspect CEO Jim Foy said in a statement explaining the deal.
This deal was the first of several in 2010 that would see companies acquired for their SharePoint expertise, their Dynamics CRM expertise or both.
RBA Consulting's Expansion into Denver
Little deals abounded in 2010 in the Microsoft channel as small practices joined larger firms to allow for growth or in anticipation of the specialization requirements of the formal launch of the Microsoft Partner Network. While many of these deals occurred beneath the radar, one example was Minneapolis-based RBA Consulting's expansion into Denver via the acquisition of a local Microsoft solutions practice and its customer base.
"We've been successful in creating a company culture that attracts, motivates and retains highly skilled Microsoft consultants and brings strategic business value to our customers and to Microsoft," Mike Reinhart, RBA President and COO, said in a statement about the expansion -- a statement that didn't mention the name of the acquired practice.
An earlier deal in 2010 demonstrated some of the same forces at work on the Microsoft Dynamics side of the Microsoft Partner Network, where partners have been under pressure from Microsoft to specialize vertically and to scale up. On Jan. 1, 2010, Sikich Inc., an Aurora, Ill.-based public accounting and consulting firm with about 350 employees, announced the acquisition of two Chicago-based Dynamics partner companies, Hal Weinberger Consulting (HWC) and MAS Consulting Inc.
"I ... feel strongly that the clients of all three firms will be better served with the increase in the available resources and services such as expanding our Microsoft Dynamics SL practice and the introduction of telephony services," Jeff Rudolph, partner in charge of technology for Sikich, said in a statement.
Avanade acquires CRM business of Ascentium
Mega-systems integrator and Microsoft specialist Avanade Inc. acquired the Microsoft Dynamics CRM assets and federal practice of Ascentium Corp. in a deal announced in April and completed in May.
The deal brought about 90 Ascentium employees in Baltimore and Bellevue, Wash., to Avanade, which is based in Seattle and has about 9,700 employees worldwide.
The move joins two Microsoft award-winning partners in the business applications space. Ascentium was named the Microsoft Dynamics Outstanding Reseller of the Year in 2009, as Avanade was being named to the 2009 President's Club for Microsoft Dynamics and to the Microsoft Dynamics Inner Circle.
"This acquisition supports our business strategy to maintain Microsoft market leadership so our customers can realize the best results from the Microsoft platform," said Adam Warby, CEO of Avanade. The Ascentium team, and employees were expected to be able to help Avanade make a joint push to be able to offer both Dynamics CRM Online through its Avanade Online Services and Dynamics CRM through on-premise installations. Avanade was founded as a joint venture between Accenture and Microsoft in 2000 and is now majority owned by Accenture.
Ascentium, meanwhile, has been reorienting around user experience consulting and business consulting. "When Ascentium made the decision to refocus the company, we began to look for a home for our Dynamics CRM practice that would mirror our commitment to our customers and our people," Mark Barrett, CEO of the Ascentium CRM practice, said in a statement. "We found both in Avanade. Avanade is known for its expertise in Microsoft technologies; it also has a long record of focusing on its customers and investing in its people."
Open Text Buys Burntsand
Open Text Corp. is an enterprise content management (ECM) software provider based in Waterloo, Ontario. The company announced an acquisition of ECM consulting services provider, and one-time Microsoft NSI partner, Burntsand Inc. on April 24 and announced completion of the CDN $11 million deal a little over a month later. Burntsand, based in Toronto, had strategic partnerships with Microsoft, EMC and BMC.
In a letter to Burntsand customers in May, Open Text President & CEO John Shackleton wrote, "Burntsand brings unique technical expertise and insight in ECM, collaboration, enterprise operations and services management. Together we are ready to serve you with a broad portfolio of solutions and services, backed by exceptional customer support and an extensive network of value-added partners."
Tallan Inc. buys twentysix New York Inc.
Rocky Hill, Conn.-based Tallan is a professional services firm specializing in custom application development, business intelligence and systems integration and based in Rocky Hill, Conn. Manhattan-based twentysix New York was a data management firm specializing in business intelligence and custom .NET applications. The merger paired two Microsoft Gold Certified partner companies.
In the statement announcing the deal, Tallan Chairman and CEO Craig Branning, said, "Our companies are very similar in focus and corporate culture, and the acquisition represents a fantastic opportunity to grow the business by leveraging our mutual strengths. The combination of twentysix New York’s reputation as a premier data management consultancy in the New York market, and Tallan’s veteran status in the industry, will accelerate our continued growth over the next several years."
ClearPointe acquires Do IT Smarter and Savant Technologies (Oct. 4)
ClearPointe, a Little Rock, Ark.-based managed services provider with a unique Microsoft Systems Center-based network operations center, acquired the San Diego-based MSP company Do IT Smarter in October. The deal marked ClearPointe's third acquisition in a year, following the October 2009 purchase of TechWatch in Dallas and the January 2010 acquisition of Savant Technologies.
In a statement announcing the deal, ClearPointe CEO Jeff Johnson said that because Do IT Smarter is a channel-only company, it will help ClearPointe broaden service offerings to both value-added resellers and midsize businesses. "[Do IT Smarter] became a successful Master Managed Service Provider by developing a unique service platform, offered through their network of partners located across the U.S. and Canada." The Do IT Smarter network of more than 150 service provider partners will continue to operate under that brand in 40 markets.
Heartland Technology Solutions acquires CNS Inc.
HTS, the 25-year-old Midwestern IT firm started by peer-to-peer pioneer Arlin Sorensen in Harlan, Iowa, partners with Microsoft, HP, SonicWALL and others. Computers, Networks, Solutions Inc. (CNS) of St. Joseph, Mo., gave HTS its seventh location and a base of operations in northwest Missouri. "By acquiring the IT and telephony business from CNS, HTS is able to leverage our resources, skills and knowledge of technologies to a larger client base," Connie Arentson, HTS President, said in a statement.
Avtex acquires Inetium and Convergent
(Sept. 8 and Nov. 10)
Avtex is an applications and systems integrator specializing in contact centers and unified communications. Inetium is a former Microsoft NSI specializing in SharePoint, Dynamics CRM and .NET technologies. Convergent deals in Microsoft unified communications (UC) solutions and belongs to Microsoft's UC Partner Advisory Council.
The three Minneapolis area companies will go forward under the name Avtex Solutions LLC on Jan. 1, 2011. In a statement Sept. 8 announcing the Avtex-Inetium deal, Avtex CEO Dave Johnson said, "Inetium's deep background in Microsoft technologies, including SharePoint, CRM and .NET ... are very complementary to the core services offered by Avtex." For the Nov. 10 Convergent acquisition, Johnson said, "By combining Convergent's proven skills in unified communications with Avtex's core competency in contact centers and Inetium's SharePoint and CRM experience, we are well positioned to impact the enterprise communication and collaboration marketplace."
Perficient acquires SpeakTECH
A late 2010 deal combined two Microsoft NSIs -- St. Louis-based Perficient Inc. and Costa Mesa, Calif.-based speakTECH.
With the $15 million deal, Perficient gains what CEO Jeffrey Davis calls "proven sales and delivery teams, attractive services mix, and impressive client roster and bill rates." Perficient expects speakTECH's approximately $16 million in annual revenues to increase Perficient's current annualized revenues to nearly $230 million. The addition of speakTECH adds about 120 employees to Perficient, bringing the combined company to about 1,400 consulting, technology, sales and support professionals in North America. Perficient also has offshore locations in Eastern Europe, India and China.
"The acquisition of speakTECH further strengthens Perficient’s ability to bring a comprehensive portfolio of business-driven technology solutions to market," Davis said in a statement on the deal.
Perficient COO Kathy Henely said in the statement that "speakTECH’s interactive design, social media and collaboration consulting capabilities are highly complementary to several of Perficient’s existing focus areas." Perficient practices that should benefit from the speakTECH addition include user experience, portals and commerce practices, she said. SpeakTECH also increases Perficient's market presence in California and Texas.
Meanwhile, Perficient remains on the lookout for further deals. "We’re looking forward to pursuing additional acquisition opportunities in 2011," Davis said.
Atos Origin Buys Siemens IT Solutions
One of the biggest systems integrator M&A deals of 2010 came in the closing weeks of the year when Atos Origin and Siemens announced plans to form a global strategic partnership to create what the companies call a "European IT champion."
Under the terms of the deal, Atos Origin was to acquire Siemens IT Solutions and Services for about 850 million euros, while Siemens gets a 15 percent stake in Atos Origins for at least five years. The transaction creates an IT services company with about 78,500 employees worldwide and pro forma 2010 revenues of about 8.7 billion euros. The new company will focus on managed services, cloud computing services and a broad variety of systems integration solutions.
Atos Origin was one of the first global systems integrator partners to commit to reselling the Microsoft Business Productivity Online Suite in 2009 and also has a major practice area around Windows 7, among other Microsoft technology-based practices.
Scott Bekker is editor in chief of Redmond Channel Partner magazine.