In the second week of January 2011, there were already dozens of mergers & acquisition (M&A) transactions among SMBs. Four involved buying up MSPs.
Most of these companies if not all of them wouldn't make the major financial press and definitely aren't household names, but they are part of the MSP Mentor 100, one of the nascent measuring sticks of the country's top performing MSPs.
Take this deal: Microholdings US acquiring ConnectIT Networks Inc., a managed services provider in Canada. And then this one: NetGain, acquiring DLP to gain entrance into the Cincinatti Ohio metro vertical. And then there's the mindSHIFT acquisition of Alpheon.
What makes the Alpheon buy so special, you ask? Well it's worth noting because it signals a shift in strategy of MSPs as they look at options and growth prospects. It could also be an early sign of a larger paradigm shift as Charles Weaver of MSP Alliance noted, that larger paradigm shift in the dealmaking world in which non-MSPs want to gain access to the MSP market through acquisition.
Of course, channel acquisitions aren't new. There were many pivotal deals last year which gave momentum to dealmakers making noise at the beginning of this year.
Yet as the MSP business line becomes more attractive to larger players such as Hewlett-Packard, Microsoft, IBM and the rest, one would surmise that mid-tier MSPs would be on the shopping list of companies like that, leaving room for mid-market and small, off-the-radar consolidations to follow.
If you're an MSP thinking of an entrance or exit strategy through a merger or acquisition, this might be your time.
Posted by Jabulani Leffall on January 12, 20111 comments
Can you imagine an IT service firm, in this economy no less, turning down new business? Sounds counterintuitive, risky and even stupid doesn't it?
But that's exactly what some MSPs are doing. Why? Because they've found an industry vertical that works for them and are going full bore to grow into that niche.
One example is ETG, a service provider out of Birmingham, Alabama, which has claimed it has an actual glut in customer growth that has left it unable to respond to all business that comes its way.
For that reason ETG has declined all IT-related work outside of t its healthcare vertical. In essence, ETG has become a full-fledged healthcare MSP. The service provider even sees 2011 projected growth remaining as strong as its 2010 annual growth.
Going even deeper inside the health vertical are people such as Micah Jones, CIO of Phoenix Ortho which specializes in IT services orthopedic medical practices. Jones says understanding a business inside out leads to natural upselling, repeat customers.
The same can be said for IT service shops that work solely with insurance groups or financial service providers or community banks, both of which, like healthcare, are showing steady growth and are at the forefront of data migration, storage and information processing technology shifts.
While it may be a risk to put all of one's eggs in one basket, by sticking to an industry vertical and becoming almost an appendage of that vertical from an IT standpoint, priorities won't get scrambled.
Posted by Jabulani Leffall on January 12, 20110 comments