LAR Insight Enterprises Acquiring Managed Microsoft Partner Ensynch

Insight Enterprises, a distributor and Microsoft Large Account Reseller, is in the process of buying its Tempe, Ariz. neighbor Ensynch, a managed Microsoft systems integrator partner with multiple gold and silver competencies in the Microsoft Partner Network.

The deal was announced last week and is expected to close in 30 days. Terms were not disclosed.

With 5,100 employees and $4.8 billion in 2010 sales, Insight is bringing on the much smaller Ensynch to take its Microsoft-based services to what Insight President and CEO Ken Lamneck described in a statement as the "next level."

"Through a dedicated focus on client service, the Ensynch team consistently ranks in the top 2 percent of Microsoft partners. Combining Ensynch's technical skills with Insight's sales engine will elevate our ability to provide clients with complete software solutions to drive their success. We are excited about adding Ensynch's industry-leading capabilities in cloud, identity management and virtualization to our existing offerings," Lamneck said.

The acquisition buys Insight a firm with $16.2 million in 2010 services revenues, 65 full-time employees, more than 70 contractors and regional offices in Southern California and metropolitan New York.

Ensynch has three MPN gold competencies (virtualization, security and identity, and portals and collaboration) and six MPN silver competencies (business intelligence, content management, desktop, search, systems management and unified communications). Ensynch is also a Quest Software Platinum CSP Partner and a Citrix Silver Solution Advisor Partner.

The deal received a high-level blessing from Microsoft. In a statement accompanying the announcement, Jenni Flinders, vice president of the U.S. Partner Business, said, "With this acquisition, Insight and Ensynch perfectly complement each other's relative strengths to form a business that delivers more robust and comprehensive IT solutions to customers."

In addition to getting into growth areas, the acquisition may have another motivation for Insight. Microsoft had planned to introduce changes to its LAR payment model this month, reportedly to drive LARs to make more midmarket sales by reducing licensing payouts to LARs in enterprise accounts while increasing the payments on midmarket accounts.

In an earnings statement back in February, Insight warned investors that its largest software partner [read: Microsoft] was changing its channel incentive programs in late 2011. "[Insight] has updated its analysis and now expects the full year 2012 impact on gross profit to be between $5 and $10 million," the company said at the time. "The program changes will be finalized over the coming months and in the meantime, the Company is implementing action plans intended to help mitigate this expected impact."

Getting extra Microsoft services-based revenues from Ensynch could help Insight plug at least part of that revenue hole.

Posted by Scott Bekker on September 26, 2011