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MSP Mergermania in 2011?

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, 2011