2023's Top 10 Tech Advisor Stories: There's Always More M&A
New M&A strategies between boutique players exploded in mid-2023 after the consolidation of national players.
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Channel media have reported ad nauseum about the opportunity that's opening up for partners as vendors cut staff. Many technology advisors don't feel so happy about it.
It's a common story that got more common in late 2022 and all throughout 2023. Suppliers all across the technology world, from cybersecurity provider Rapid7 to infrastructure provider Dell, announced mass layoffs and a subsequent shift to more of a partner-led sales model. The telecommunications world, including UCaaS and CCaaS vendors, managed network services providers and cablecos, also saw bloodletting.
Agents expressed to Channel Futures that they worry customer support is decreasing. A post-sale gap always existed for technology advisors and the managed service providers they sell, but the gap seemed to widen.
Take for instance, Profit Advisory Group president Barry Bazen's observation.
“You have accounts that are spending $1 million a year with these providers. And when we call in, we always ask if there’s a dedicated account rep. And it is more the norm that a $1 million-a-year customer does not have a dedicated account rep. So for anything they need, it’s 1-800-Dial-A-Prayer," Bazen said.
Read the perspectives of Bazen and Kairos Data Communicitions' Lucas Salvage, who weighed in on restructurings at AT&T and Verizon.
The FCC didn't order ILECs to shut down their copper facilities. But the forbearance saw carriers speed up their efforts to move businesses off copper-based TDM services. Customers and the technology advisors that serve them reported sudden and massive price increases on previously purchased lines. Other businesses said their lines are going away altogether.
The copper conundrum has led to mass jockeying among ILECs and aggregators to provide POTS aggregation and mobility and IP-based replacements. And for many TAs who were strategically pivoting away from telecom as a core part of their business, POTS replacement helping them play a key strategic role with clients.
Read our story about copper price hikes and shutoffs.
The first inning of consolidation in the tech services distributor (TSD) space unofficially came to a close with AppDirect's Feb. 1 purchase of TBI.
The announcement came after almost a year of speculation about which company would buy TBI. Subscription commerce provider AppDirect expanded to its tally of TSD acquisitions and significantly boosted its capabilities with "Big 5" connectivity providers. TBI leaders said teaming with the marketplace would give partners more opportunities to sell cloud/SaaS offerings.
Prior to the news, ScanSource had bought Intelisys, Telarus had bought CarrierSales and TCG, and Avant had bought PlanetOne. The field of "national TSDs" has winnowed.
Channel Futures also examined the dozens of layoffs that came to TBI employees in the months leading up to the deal.
Read the initial news story about the acquisition.
This isn't one story but rather a steady trickle of announcements that reached the Channel Futures news desk in 2023. It was a steady drumbeat of new and existing companies that see an opening in the market to build a better superagency or TSD.
Mass consolidation accelerated in 2020 and 2021 in both the TA and TSD sides of the channel. On the TA front, Berkshire-backed Upstack made the earliest splash in 2021, and its acquisitions of agent books of business has reached 30. Bluewave Technology Group made its presence known about a year later in early 2022 with its $75 million Columbia Capital investment, and it made several subsequent acquisitions and hires in the following months.
Other players have announced differentiated M&A strategies.
One Source shared its strategy of upfront, quick-turnaround acquisitions. The company sees an opportunity to onboard and nurture customer bases from partners who want to retire or focus on new logo acquisition.
Amplix emerged at the end of 2022 as an agreement among three TA leaders to explore M&A on their own terms. That firm has gone on to deepen its customer footprint both on the East Coast and across the country. Its funding from Gemspring has helped it buy agent books of business as well as differentiated plays like a mobility management provider and CCaaS services provider InflowCX.
In the meantime, Bridgepointe Technologies' M&A has picked up, with the national advisory firm giving investments to existing IT strategist partners, agent and regional TSD books of business, and strategic adjacencies in companies like PPT Solutions.
AT&T gold partner NetSparkIPandTelecom is working with Everbridge Capital Partners to buy multiple types of channel partners. They posit that bringing together diverse partner models and technologies can lead to rich cross-selling opportunities. Many partner leaders have shared a vision of expansivecross-selling that will come from consolidation.
There's also E78 Partners, an Illinois-based play that pairs a technology advisory practice (including MacroNet and Profit Enhancement Systems) with financial and business services arms.
D&M partner Vic Pepe and Intelisys alum Jay Bradley have courted TAs to join holdings company Capteon, which exists as an option for partners that don't want to sell their businesses just yet but might want to in the future.
There also are the former RapidScale execs who believe their startup Procure IT will change the agent game with the combination of a digital platform, deeper data insights and technology-specific consulting practices.
Then the TSD side of the channel saw an influx of regional and boutique players that say they're building a better mousetrap. ScanSource-owned Intelisys, Telarus, Avant, AppDirect and Sandler Partners appear far and away the five largest companies in the space. They are winning distributor of the year awards from top vendors and increasingly scaling their influence with supplier partners. Each has made significant expansions to their headcount and platforms. But other players have emerged with a contrarian or niche strategy.
CX Effect is entering its fourth year. Andrew Pryfogle's outfit focuses on a select portfolio of profitable technologies related to contact center as a service (CCaaS) and customer experience (CX). The company continues to court leading TAs to put more business with them.
Jon Heaps' Ascent Business Partners initiated a play that is friendly to the national TSDs. Ascent works with a handful of small, specialized vendors who add AI or machine-learning to the contact center environment but lack the resources or staffing to operate in the average TSD portfolio. Ascent has partnered with at least two large TSDs.
TDM-family company Clarus Communications bought Datatel Solutions in the spring and subsequently offered lifetime 100% pass-through for a $1,000/month subscription.
XCV Partners emerged in the summer under the leadership of former VXSuite and Telarus employees Doug Tolley and Roger Blohm. XCV exists under Caliber Solutions Holdings, which includes Chris Gamble's consultancy, Caliber Solutions. Caliber, one of the leading enterprise-focused agencies, wanted a TSD that was specialized to the needs (or more so, demands) of a mature agencies. Tolley and Blohm said they're looking for a select group of focused vendors and agents who want to tackle enterprise accounts together.
Then there are other boutique TSD players flying under the radar for now, including Sagent and ForgeOS, which are quietly conducting outreach to partners.
That's a lot of people who say they've found the right niche. Is there enough room for everyone?
The fine folks at Advanced Technology Consulting (ATC) reached out to Channel Futures in early fall with a trend that they had been observing: deals elongating in the first and second quarters of the year. And many of their peers in both the TA and MSP spaces agreed.
Customers weren't saying no on technology adoption, but many had elected to take more time to kick the tires on different solutions. Worsening macroeconomic trends played a role, as did the rise of new C-suite tech priorities related to AI.
But most of those partners agreed that the trend turned around in the second half the year. Many advisors saw customers accelerate the procurement process following the July 4 holiday weekend. The data backs that up as well. Our Q3 tech advisor survey showed a significant uptick in customer spending appetite.
Read our story, featuring voices from ATC, Avant, CCG, Rise, Omdia, CXponent and other members of the channel community.
Comcast Business announced a significant change to its partner program and plans to say goodbye to a pivotal leader.
First the news came out of a RIF in the hundreds at the cableco, with several director-level channel folks impacted. Channel execs impacted included Scott Mull, who led indirect sales operations, and channel head Craig Schlagbaum. One of the overarching themes of the restructuring was Comcast's channel marketing and channel sales operations teams merging into Comcast Business's "headquarters" teams. The people on those teams will still focus on channel, according to a spokesperson.
Read about the details of Comcast Business' restructuring, as well as a retrospective on Craig Schlagbaum's 13-year run at Comcast.
Technology advisors hired often in 2023, marking a shift from "agent" to "agencies."
Partners consistently reported to Channel Futures in quarterly surveys that their headcounts were growing. Many are picking off people laid off from their supplier partners. Others have recruited people from the customer side that they've built relationships with over the years. Others are hiring from entirely outside IT, adding college interns and introducing them to the channel.
At the same time, partners often reported talent recruitment and retention as a top challenge.
Channel Futures hosted a roundtable of TAs and MSPs, who spoke about how they're overcoming staffing challenges.
ScanSource CEO and chairman Mike Baur stressed to partners that his team will make more investments into the Intelisys TSD business.
Intelisys, an agent channel pioneer that has built up a massive base of suppliers and technology advisors, saw some of its leaders leave in 2023. That included Intelisys president John DeLozier and agency sales leader Chandler Legarretta, and later ScanSource president John Eldh.
Baur told Channel Futures that ScanSource intends to put more resources into Intelisys and elevate the practice's brand. That could include M&A, he said.
Intelisys partners assured Channel Futures that they continued to receive consistent support from the TSD's field resources and found Baur's keynote comments at Channel Connect reassuring.
Private equity-backed technology advisor firms purchased two huge CX players in the last year.
Charlesbank-backed Bridgepointe right at the end of 2022 announced the acquisition of PPT Solutions. That deal gave Bridgepointe IT strategists a deepened bench of CCaaS and CX experts to leverage, as well as a brand new set of services to offer customers.
About 10 months later, Gemspring-backed Amplix bought InflowCX. The deal similarly gave Amplix in-house talent for CX consulting, implementation and management services.
Moreover, both companies vowed to continue serving the technology advisors who had been partnering with PPT and InflowCX. Bridgepointe hired Jamaal Savwoir specifically to nurture PPT's previously established relationships with TSDs.
"As an industry, we're still scratching the surface in the spend and applications that are out there to go get. The more we help each other and the more all of us do well, the better it is for all of us. We want this to be the primary way people make technology investments," Amplix president Dan Gill said.
Read about the Amplix acquisition of InflowCX.
Partners continue to sell unified communications as a service (UCaaS), but the value proposition is changing for some firms.
A survey of tech advisors found that UCaaS sales decreased for 19% of them and increased for 28% for some of them. Anecdotally, some partners revealed that they're selling just as many seats as ever, but the pricing has been steadily decreasing. Others say most of their customers have already adopted UCaaS following the pandemic, although some businesses wish to rethink a platform they bought three years ago.
Some tech advisors feel that UCaaS will remain highly strategic for them going forward, and they plan to add more certifications and deployment skills to improve the customer experience.
Read more results from Channel Futures' Q3 Tech Advisor Market Outlook survey.
Partners continue to sell unified communications as a service (UCaaS), but the value proposition is changing for some firms.
A survey of tech advisors found that UCaaS sales decreased for 19% of them and increased for 28% for some of them. Anecdotally, some partners revealed that they're selling just as many seats as ever, but the pricing has been steadily decreasing. Others say most of their customers have already adopted UCaaS following the pandemic, although some businesses wish to rethink a platform they bought three years ago.
Some tech advisors feel that UCaaS will remain highly strategic for them going forward, and they plan to add more certifications and deployment skills to improve the customer experience.
Read more results from Channel Futures' Q3 Tech Advisor Market Outlook survey.
M&A in the tech advisor channel hit pandemonium levels in 2023, with new players popping up everywhere to grab market share.
2022 was a gigantic year for M&A and private equity in the agent channel. It impacted both the technology advisor (TA) and tech services distributor (TSD) sides of the channel, with a handful of consolidation plays solidifying behemoth national players. 2023 saw an encore of holding companies emerge as founders targeted market niches they felt they could corner.
Channel Futures gives an extended recap of new M&A plays in slide four of its year-end highlights. The slideshow above focuses on the 10 biggest trends and stories of the past year.
Some of these stories are what partners love to talk about at the lobby bar: executive departures, acquisitions and layoffs. But the 2023 recap also features the research that TSDs and TAs are sharing with the community. Although some tech advisors say that they don't want to participate in M&A, they and their acquisitive peers both report a similarly bullish outlook for the channel.
The advisory channel is growing, and other parties in the larger IT channel and IT world are taking notice.
Channel Futures uses the terms "agent" and "technology advisor" synonymously, referring to a channel partner model that sources managed services from a vendor. Vendors bill and support the end user and provide a monthly evergreen commission to the agent.
Go through the 10 images above to see 10 stories and trends that impacted the tech advisor community the most.
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