4 Ways MSPs Can Benefit from M&A Activity Among Distributors

By Jason Beal

Jason Beal

A wave of mergers and acquisitions has boosted the size of leading technology distributors over the last two decades, and investors continue to show a healthy interest in the economic value of the channel-partner ecosystem.

And the big players keep getting bigger. Last year, private equity firm Platinum Equity announced its $7.2 billion acquisition of Ingram Micro and plans for global expansion — including anticipated future growth via mergers and acquisitions, according to a statement from the firm.

In March, Synnex and Tech Data released their plans to merge in the second half of 2021. When that deal closes for two of the largest global distributors, it will create the largest IT distributor in the United States with approximately $57 billion in annual revenue and more than 200,000 available products.

Sounds great, right? Yes, sizable growth can certainly be a good thing for distributors — as well as the managed service providers who rely on them. But this shift also brings new challenges and opportunities to anticipate the highly personal needs of MSP customers and to deliver with scalable, world-class service at a time when demands for technology solutions are greater than ever.

After all, three in four MSPs, or 75%, have seen an increase in business needs during COVID-19, according to CompTIA, so there’s plenty to consider as distributors grow larger and stronger. MSPs also have ample ways to take advantage of these partnerships to benefit their own customers and increase revenue.

How Market Shifts Benefit MSPs

Here’s a look at four ongoing shifts and how they’re poised to benefit MSPs:

For MSPs – and even for VARs – one combined distributor marketplace could make buying much easier. Ultimately, the number of available product SKUs in one place could skyrocket. Given how many potential ISVs there are for resellers to choose from, having them in one convenient location is a big value-add.

This type of personalization elevates the experience for MSPs — and ultimately helps to …

… ensure their customers are getting the best bundled services.

Look at it this way: Say that a distributor has strong partner data around technology-buying patterns in the legal industry. That distributor could analyze those findings and communicate them to other partners that also serve legal clients via a comprehensive playbook that identifies key items to sell. Having a cohesive knowledge of vertical markets and trends at the ready benefits everyone.

Additionally, new and complex projects that an MSP’s customers undertake will often require a host of technologies from different vendors. Consider some of the smart-city initiatives such as sensor-enabled trash cans and autonomous vehicles. These functions require a host of technology solutions, such as Internet of Things devices, connectivity, security and other services to maintain them.

When distributors pivot to bundle products and services from multiple vendors, MSPs can simplify a customer’s eventual purchase and deployment — thus making a sizable sale easier to pitch and likely more attractive. A package deal, properly planned and marketed, removes guesswork and hassle.

Historically, though, multivendor solutions haven’t been a strength for distributors. The hope is that M&A activity may spur a shift to packaging related solutions together. This not only helps partners buy more and make more money, but it also empowers them to deliver their core mission of serving customers effectively.

So, MSPs should inquire about alternative financing models that allow them to acquire the tools they need. These options include leasing, lockbox, escrow accounts, and per-user or consumption-based billing. When distributors look beyond traditional lines of credit, they’re able to maintain valuable MSP spend, and MSPs can keep their purchasing power to adequately service their customers.

Looking Ahead

Amid all this change, MSPs must demand a constant from distributors: deep institutional knowledge, and strong service to enable the critical resources that customers need. And by taking advantage of new solutions and opportunities prompted by M&A activity in the distributor space, MSPs can make themselves even more indispensable to end customers.

Jason Beal is senior vice president, Global Channels & Partner Ecosystem, at AvePoint. He is committed to building relationships with MSPs, solution providers and systems integrators, as well as expanding AvePoint’s global distribution networks and cloud market presence. He spent eight years working in Europe with Palo Alto Networks and Ingram Micro, leading global distribution and commercial channels, advanced technologies division and EMEA public cloud go-to-market. You may follow him on LinkedIn or @avepoint on Twitter.