All Covered: What Happens to MSPs Post M&A?

post merger acquisition

The background: All Covered purchased each of those IT service providers in 2012. Take a closer look at each company and you’ll see a blueprint emerging for All Covered’s continued growth and evolution:

Put them all together and All Covered plans to extend into emerging markets (cloud, VDI), vertical markets (health care, legal, education and much more) and industries that complement All Covered parent Konica Minolta (managed print services and document management).

Pre- and Post-Deal Details

But how do MSPs actually discuss M&A with All Covered? And what becomes of the MSP once All Covered completes the acquisition? Here are views from Covisia, PC Solutions and Thinsolutions leaders, post M&A…

1. Bill Fistori, managing director for All Covered Boston (previously CEO, Covisia)

Bill Fistori

Connecting with All Covered: Fistori had a business relationship with All Covered CEO Todd Croteau that has stretched on for years. Covisia had done its own acquisition earlier, so the company had a good feel for the opportunities and challenges tied to scaling through M&A. After careful consideration, Fistori decided All Covered was the best route forward to “build a larger practice in this region; we’re out to dominate New England.”

Gearing Up for Cloud Services: Fistori says there’s a general trend toward the centralization of technology in the data center. And that centralization trend means you need to be “cloud ready” — which is where the Covisia relationship with Citrix paid big dividends.

How to Prep Your Company for Growth or a Sale: “As a company you need to have one, three- and five-year goals and those goals need to tie to your personal life plan,” said Fistori. “What do you actually want out of that plan? Is it a [financial] number? A lifestyle? How do you prep for that.”

Each time a potential buyer called Fistori, he took the call. “I would always answer the phone and have a 15 to 3o minute conversation just to understand where they are coming from — whether it’s private equity types or someone else. Those conversations help me get market research-type knowledge that I didn’t have to pay for.”

Life after the M&A: All Connected was on-site at Covisia when the deal closed. “It’s controlled chaos as you’d expect; you’re running your business, bringing in revenues in a profitable manner, and you’re integrating people with systems and some changes. But for me it’s business as usual — though I’m busier than ever.”

Among his goals: Participating in All Covered’s nationwide cloud push. “Right now you have niche players that are regional in terms of backup and other data center stuff. With the minds we’re bringing together plus the resource All Covered has, we should make quite a big impact in the cloud market.

2. Mark Berndt, managing director for All Covered Minneapolis (formerly president and CEO, PC Solutions)

mark berndt

Connecting With All Covered: “I did my due diligence,” said Berndt, before adding with a hint of humor: “We first spoke in 2001. Back then I didn’t have any interest. But we have since done some small M&A deals and I found out just how hard it is to do.”

Quick math suggested PC Solutions would need to acquire about five more companies to achieve the scale Berndt was seeking. “We started analyzing how quickly we could get new services to market while remaining independent vs. the potential scalability form joining All Covered.” The math, obviously, suggested Berndt sell his business to All Covered.

Advice to MSPs and VARs on the M&A Front: “Run your business as though you want it to be attractive all the time, not just when you’re looking to potentially sell. Make sure you’re in the upper quartile of your industry. Once you decide it’s time to explore opportunities then speak to multiple people.”

Look for Market Expertise: “The cable companies… the telcos… everybody wants to be in the SMB managed service market. A lot of buyers don’t know what they’re getting into. All Covered and Konica Minolta understand SMB. They get it. They know it and they’re committed to it.”

Life After M&A: “I’m working harder than I’ve ever worked. There’s very little business disruption post M&A. We continue to do business as we normally would. We take baby steps toward the integration, slow, methodical, well thought out processes. And that’s refreshing.”

For instance, PC Solutions’ financial systems are integrated in terms of transmitting to All Covered’s systems. But it won’t be until around Aug. 1 when PC Solutions cuts over completely to All Covered’s financial system.

3. Mike Fischer, managing director (formerly CEO of Thinsolutions)

mike fischer

Connecting with All Covered: As Thinsolutions approached the 50-person employee mark, Fischer was thinking about the nuts-and-bolts infrastructure and corporate services that the company would require to move forward. For instance, gaining HR support at All Covered looked like a very attractive move. Fischer also liked All Covered’s Konica Minolta backing and cross-selling growth opportunities.

Fischer spoke with about 10 potential buyers and became convinced that All Covered “knows what they’re doing.”

Life After M&A: Similar to Berndt’s experience, Fischer says he’s been “working harder than I ever have.”

Fischer says All Covered has a “good process, a basic process that centers around not trying to disrupt too much in terms of changes from employee and client standpoint.” Any M&A deal will likely be “a jolt and a shock to employees but you have to assure them they’ve all got jobs and you need them, and clients will still get the great service they’ve known.”

Changing of the Brand

Gradually, All Covered transitions acquired brands to the corporate All Covered brand. A spokesman for the company says step one is co-branding, particularly on the acquired company’s website. And then gradually, the acquired company’s content is transitioned into the greater All Covered business. And the acquired company’s website is redirected to a specific city website page on the All Covered website. The transition typically occurs four to eight months post acquisition.

The brand, at the end of the day, is All Covered IT Services from Konica Minolta.

The Deeper, Long-term Story?

Admittedly, MSPmentor has merely scratched the surface with this blog entry. We didn’t discuss the M&A negotiation process. And how will each of the acquired businesses — and their team leaders — evolve over the next three, six and nine months?

We’ll continue to follow each entrepreneur’s story as they seek to succeed as part of a larger, national IT service provider.