Rousing MSP M&A Roundup: Avalara, Sourcepass, Auvik and More
M&A activity was truly off the charts in 2022, despite whispers of a potential recession and industry shifts.
December 9, 2022
![The last few days have seen a flurry of deals and M&A activity in the channel in particular in the cloud and consulting The last few days have seen a flurry of deals and M&A activity in the channel in particular in the cloud and consulting](https://eu-images.contentstack.com/v3/assets/blt10e444bce2d36aa8/blt6baa8d51941d10cb/65240d7cf66dd92451a7c73c/Money_0.jpg?width=700&auto=webp&quality=80&disable=upscale)
The last few days have seen a flurry of deals and M&A activity in the channel, in particular in the cloud and consulting services arenas. Service providers looking to better position themselves for competitive advantage or acquisition should take note of the trends these deals highlight.Thinkstock
Tax and compliance software provider Avalara, now backed by private equity firm Vista Equity Partners, acquired various Oracle application connector technology from AppKnit. Financial terms of the deal were not disclosed.
Vista Equity Partners, around the same time of the Avalara-AppKnit deal, acquired Avalara in October 2022 for $8.4 billion.
“We’re excited to see the expansion of Avalara-owned connectors. Avalara’s innovative Oracle connector technology is intuitive and scalable, making Oracle and Avalara customers’ lives easier. This is the next evolution in our efforts to marry best-in-breed technology and Oracle expertise.”
Yelluru now shifts to senior director of enterprise solutions at Avalara.
ICS acquired TechMD, a provider of managed IT services to small to medium businesses, headquartered in Orange County, California.
Under Mark Perez and Sebastian Igreti over its twenty-year history, TechMD has helped SMB businesses and organizations by providing IT managed services, cybersecurity services, technical services, cloud solutions and product procurement.
“The TechMD team is terrific – they share our values and our dedication to customer service,” said Kevin Blake, CEO of ICS. “We look forward to working with them and continuing to be a positive force for our customers, our employees and for the communities we serve.”
Auvik, the network monitoring software provider, bought a pair of companies. The first is Saaslio, which offers software-as-a-service security and management. The second is Boardgent, a remote device management company.
These snap-ups are part of Auvik’s plans to expand its capabilities overall. They are also designed to aid MSPs and internal IT departments in effectively managing the end-user experience.
By bringing Saaslio and Boardgent into the fold, Auvik will provide a specific toolset to providers. This includes greater control, visibility and troubleshooting capabilities over the new last mile of the office network.
“An organization’s ability to be productive is paramount anywhere,” said Marc Morin, founder and CEO of Auvik. “Auvik is working to support distributed-first organizations that need a centralized tool to monitor and manage the modern work environment. Auvik, Saaslio and Boardgent have a similar approach to the market and how we value our clients. We believe that the combination of our deep expertise in network monitoring and management, experienced workforces, proprietary technologies and innovative solutions allows our unified company to deliver the ultimate network monitoring platform.”
Sourcepass, No. 328 on our 2022 MSP 501 list, acquired Infinity Computer Systems (Infinity). Infinity is a Microsoft partner that enhances the services of Microsoft Dynamics 365.
With the acquisition, Sourcepass’ SMB clients can now access this sophisticated tool, along with Sourcepass’ support and wide portfolio of other IT solutions.
“We are always looking for ways to help our clients evolve their technology as their businesses grow,” said Chuck Canton, CEO and founder of Sourcepass. “Many companies who have outgrown other applications move to Microsoft Dynamics 365 for its more robust reporting and multi-user capabilities.”
Canton said that smaller companies, however, may not have the budget for the platform or may lack the technical expertise to transition to a new system.
Thrive, number 50 on the Channel Futures MSP 501 list, acquired U.K.-based Custard Technical Services. Custard specializes in managed services in the East Midlands and surrounding areas. The acquisition is designed to allow clients of Custard to benefit from Thrive’s managed cybersecurity, cloud services, and automation platform.
Custard Technical Services, around since 1996, provides a comprehensive range of IT solutions. These include consultation, managed services, disaster recovery planning, IT security backup solutions, and ongoing software and hardware support and maintenance. Custard helps clients become more secure through flexible IT solutions that elevate businesses to surpass IT goals.
“Custard is a customer-centric, no-nonsense IT support and security company,” said Rob Stephenson, CEO of Thrive. “[We have] an excellent track record of providing a superb IT experience to clients of all sizes for over two decades. We’re excited to add Custard to our ever-expanding U.K. operations due to their incredible management team, dedicated employees and customers, as well as their attractive geographic location in Nottingham, which will open up the Birmingham, Manchester and Leicester markets for Thrive’s Managed Services & Cybersecurity offerings.”
XenTegra joined with Mindcentric to begin a new entity called XenTegra ONE. Powered by Mindcentric, this partnership will leverage XenTegra’s deep technology expertise. This has served enterprise clients for data center infrastructure, cloud and end user computing. Mindcentric will continue to be its own company but will serve as the sales and support arm of XenTegra for the SMB space.
This is a strategic and mutually beneficial move for both organizations. Mindcentric has a smaller reach on the West Coast, and XenTegra serves larger businesses mostly on the east coast. Both teams have backgrounds in managing critical infrastructure, investing in data centers, and other managed services. XenTegra One will be able to deliver solutions to SMBs covering a broader area.
The goal is to become the nation’s top partner for digital transformation and end user computing. Combined, XenTegra One will have four data centers, more than 100 engineers and a plethora of certifications. Users will have access to engineering capabilities, a federal/SLED team, near-shore and off-shore teams, and staffing resources. Mixed into the portfolio are technologies such as ServiceNow and Nutanix.
Entech completed a recapitalization partnership with Prospect Partners. The goal of this funding is to accelerate Entech’s growth and expansion efforts, priming them for a focused acquisition strategy.
In its 25th year in business, Entech, a 2022 MSP 501 winner, aims to build the most recognizable managed IT service-focused organization in Florida. How does a company do this? Entech realized early on that it needed to attract and acquire like-minded IT companies focused on growth and customers. The company has kept to that.
“We always knew that identifying the right capital partner with a willingness to allow Entech the autonomy to continue running the business in the same manner we are known for, would be imperative,” said Entech CEO Jake Spanberger. “We found that in Prospect Partners who has a long history of supporting growing, entrepreneurial services businesses like ours. Their experience in scaling midmarket service organizations, coupled with strong financial relationships and a true commitment to partnership, provides nearly unlimited ability for us to meet or exceed our goals, and do it in less time initially anticipated.”
Cognizant recently bought AustinCSI. The acquisition aims to enhance Cognizant’s vertical industry expertise and advisory capabilities. It will aid in goals for delivering a comprehensive digital transformation strategy, as well as top-notch solutions, to clients.
“Client demand for end-to-end digital strategy and industry-specific solutions continues to accelerate,” said Michael Valocchi, senior vice president, head of Cognizant Consulting and Americas strategy. “AustinCSI has built a stellar reputation by improving business outcomes for some of the world’s most recognizable brands, particularly in the telecommunications, media, technology and automotive sectors, markets where Cognizant is also strong. We look forward to welcoming AustinCSI’s talented experts to our team and further enriching the value we’re providing to our clients as they embrace cloud, AI, data analytics, and other advancing technologies.”
AustinCSI provides consulting services for Fortune 500 clients across different industries. The company has more than 175 consultants who design and deliver cloud and automation solutions. They utilize data to help businesses up-level their customer’s experiences and business outcomes.
Park Place Technologies will do more for and with its partners via its latest acquisition from CentricsIT, an IT services provider based in Atlanta, Georgia. It acquired the company’s professional services and third-party maintenance (TPM) assets.
This is the company’s (No. 226 on the 2022 MSP 501) fourth acquisition this year and its third consecutive acquisition in the Greater Atlanta Region.
Park Place Technologies’ professional services offering will include greater capabilities in install, move, add and change (IMAC) services, IT asset disposition (ITAD), remote hands and deployment services. Those include cabling, Wi-Fi surveys, data center installs and refreshes, and network installations.
Kelly Greene is Park Place Technologies’ vice president of corporate development. She said the timing of this acquisition was prompted by an intensifying global demand for professional services. That’s being driven by economic conditions and a highly apparent IT skills gap.
Brightworks IT, backed by private equity firm Cloud Equity Group (CEG), acquired IS Concepts, a managed IT services provider (MSP) in California. Financial terms of the deal were not disclosed.
IS Concepts is a provider with over two decades of experience providing IT services to its SMB business clients. Brightworks IT is a white-glove service managed IT solutions. Combining IS Concepts’ managed IT solutions with Brightworks IT’s existing team and infrastructure on the east coast creates a bi-coastal organization that can provide extended coverage to its diversified client base.
For nearly 20 years, IS Concepts firm has focused on ensuring its clients have the best and most appropriate technology infrastructure available without having to struggle with the high cost of a dedicated IT department.
Brightworks IT, backed by private equity firm Cloud Equity Group (CEG), acquired IS Concepts, a managed IT services provider (MSP) in California. Financial terms of the deal were not disclosed.
IS Concepts is a provider with over two decades of experience providing IT services to its SMB business clients. Brightworks IT is a white-glove service managed IT solutions. Combining IS Concepts’ managed IT solutions with Brightworks IT’s existing team and infrastructure on the east coast creates a bi-coastal organization that can provide extended coverage to its diversified client base.
For nearly 20 years, IS Concepts firm has focused on ensuring its clients have the best and most appropriate technology infrastructure available without having to struggle with the high cost of a dedicated IT department.
It was an extraordinary year of M&A activity. The industry has experienced a crazy-high volume of technology services transactions for a good chunk of time now, and 2022 was no exception, despite whisperings of a recession.
Over the past few years, hundreds of private equity firms and larger MSPss have acquired and snapped up other providers. Why? According to a report generated by Corporate Finance Associates (CFA), titled ‘Mergers & Acquisitions in the Technology Services Industry in Q3 2022’, acquirers find the recurring revenues of MSPs to be extremely attractive. The frenzy has not slowed, the pace has not waned.
Deals over the last few months have spanned the gamut, with names like Thrive, Auvik and XenTegra.
With 2023 looming in the not-so-distant future, we’ve compiled a roundup of noteworthy Q3 2022 MSP M&A and investment deals.
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