AppDirect Buys TBI, Vows to Protect Partner Relationships
In the meantime, dozens of layoffs have already taken place at TBI, with many occurring earlier this week.
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AppDirect’s Renee Bergeron said the transaction represents the marriage of two complementary forces.
On one hand, TBI boasts 30 years of supporting partners in their sales of telecom solutions. Bergeron said that group will now benefit from AppDirect’s established technology platform credentials. AppDirect’s marketplace features a deep catalog of SaaS and cloud providers that Bergeron said will pair well with the more TSD-esque contracts TBI is bringing to the table.
“If you look at us as a TSD, that makes us the largest TSD. But you can’t look at us just a TSD because, in a way with our cloud catalog, we also look like a provider of technology solutions to other channels of resellers, VARs and MSPs,” Bergeron said.
Bergeron said her team is looking at their value proposition as much more than a subscription commerce platform or marketplace. She said the value proposition, which TBI helps cement, is around “relationship-driven commerce” and a “relationship-driven marketplace.”
“This is really bringing together two of the biggest powerhouses in our technology industries and creating the largest technology ecosystem that exists in our industry,” she said.
Bergeron pointed to sales engineering as one of TBI’s biggest strengths. TBI’s team features heavy hitters like cloud solutions architect Thea Rasmussen.
That bench of resources will prove critical for technology advisors as they integrate different technologies into their solutions. For example, IoT solutions involve devices, connectivity and SaaS.
“That complexity is challenging for advisors, and having the multidisciplinary sales engineering team is key,” Bergeron said.
Bergeron said approaching the transaction with a long-term view means taking stock of the strengths that have made partners engage with TBI over the decades.
And a great deal of those strengths boil down to partner relationships and the TBI personnel who drove those relationships.
“We recognize the importance of the relationships that TBI advisors have had for years with their channel managers, business development managers and commission specialists,” Bergeron said. “It goes deep within the organization, and we want to protect these relationships to great extents.”
Bergeron said her team aims to add to what those TBI partners have experienced rather than remove existing best practices.
JS Group CEO Janet Schijns said how AppDirect evaluates TBI’s personnel will go a long way.
“TBI had some people who overcame some bad processes in the industry and whom these partners came to rely on,” Schijns said. “And if those people are gone because we made a consolidation decision, that can be a very, very challenging and difficult thing to keep a partner when their person’s gone.”
Bergeron also pointed to the University of TBI, a portfolio training courses partners use to educate themselves on technology and gain certifications.
“The training and development capabilities that TBI has built for advisors is second to none,” she said. “The amount of training that’s available at advisors’ fingertips is just phenomenal. We look forward to bringing that to all of the AppDirect advisors.”
Geoffrey Shepstone, who founded TBI in 1991 and was its sole owner, will remain as a strategic advisor.
“He’s not going anywhere,” Bergeron said. “We recognize that relationships start at the top and go all the way to the people that are on the frontline on a day-to-day basis.”
Shepstone in a statement said TBI advisors can more effectively cross-sell different solutions through the AppDirect supplier catalog. He also pointed to the platform’s centralized management.
“The AppDirect platform provides businesses and partners with access to identity management, data visualization, workflow and applications management solutions to help them manage all of their technology through the AppDirect Marketplace,” Shepstone said.
Shepstone and his leadership team have stated multiple times in the past two years that they would not accept an investment from a private equity firm.
“Private equity firms are not in it for the long haul and are quickly moving on to the next company once they receive profit,” the company wrote in a blog a year ago.
TBI leadership has also put forward the M&A occuring among its peers, including Telarus and Avant, as a reason partners should do business with independently owned TBI.
“We believe we’re the last best place to put your business,” TBI senior VP Mike Onystok told Channel Futures in 2022.
Bergeron told Channel Futures that TBI is not aligning with a private equity investor through this acquisition. She noted that Caisse de dépôt et placement du Québec (CDPQ), AppDirect’s largest shareholder, describes itself as a long-term institutional investor. CDPQ served as the primary investor for the deal.
And Bergeron said AppDirect’s backers will support the company with an eye for the long game.
“We’re not making short-term decisions in order to hit some numbers and exit. We’re in this for the-long term. So the way we bring the companies together is with that context in mind,” Bergeron told Channel Futures.
AppDirect did not disclose the financial terms of the transaction.
However, a source indicated that TBI had entered the market with hopes of selling for upward of $120 million. Worsening macroecomic conditions and changing valuations of the company lowered the going price south of $80 million, according to sources.
A source close to the matter said 13-14 people in TBI leadership received a payout from the deal.
The “TBI sweepstakes,” as many partners dubbed it, raged on throughout most of 2022.
Rumors swirled that AppSmart, Avant, Ingram Micro, ScanSource and Telarus had engaged in talks to acquire TBI. Other players may have engaged in the process, but sources close to the matter indicate that those five companies were most heavily involved in the bidding process.
Ultimately, AppDirect and its investors emerged victorious, with some of the other players having withdrawn from the process.
Bergeron said details will emerge about the leadership structure of the combined company. However, she pointed to individuals like Mike Onystok, TBI’s senior vice president, and Adam Knudsen, TBI’s senior vice president of sales operations, who will slot into senior roles at AppDirect.
“The leadership team of TBI is coming across to us,” Bergeron said.
TBI has already laid off people.
As of Tuesday, multiple people posted publicly that they were seaching for work. That included sales operations, project management and supplier relations. Sources indicated that the total number of layoffs conducted Tuesday totalled about 40. The same sources indicated that about 15 of those cuts came at TBI’s Omni Center.
Those layoffs pair with reports of about 18 people who saw their positions eliminated a few weeks ago.
AppDirect declined to state the total number of employees at TBI prior to the acquisition.
TBI in last year’s disclosure for the Chicago Tribune’s 2022 Top Places to Work lists its size as 230 U.S. employees.
AppDirect last week fully brought its AppSmart side of the business under the AppDirect brand. The AppSmart side encompassed the different TSD companies it has integrated to serve its technology advisor (agent) partners.
“Unifying every key element of our ecosystem is a pivotal stepping stone in achieving our mission to simplify how customers buy, sell and manage their technology,” AppDirect CEO and chairman Nicolas Desmarais said last week. “Our advisor support teams will remain consistent through this unification while our company overall will continue to work on groundbreaking approaches and technologies to help our customers grow and thrive.”
Bergeron said Illinois-based TBI also fits with AppDirect’s geographical footprint well. AppDirect will retain TBI’s headquarters in Chicago as one of its offices.
“Their strength in the Midwest is second to none,” she said.
She also noted that TBI brings a base of business in the Northeast. That fills a gap for San Francisco-based AppDirect, whose previous acquisitions operated out of California (WTG), Georgia (MicroCorp), North Carolina (CNSG) and Michigan (Telegration).
Bergeron said Illinois-based TBI also fits with AppDirect’s geographical footprint well. AppDirect will retain TBI’s headquarters in Chicago as one of its offices.
“Their strength in the Midwest is second to none,” she said.
She also noted that TBI brings a base of business in the Northeast. That fills a gap for San Francisco-based AppDirect, whose previous acquisitions operated out of California (WTG), Georgia (MicroCorp), North Carolina (CNSG) and Michigan (Telegration).
AppDirect executives say their purchase of technology services distributor TBI creates the largest ecosystem in the tech advisor channel.
The B2B subscription commerce platform announced the acquisition of Chicago-based TBI on Wednesday. The deal unites one of the channel’s longest running tech services distributors (TSDs) in 32-year-old TBI with CDPQ-backed AppDirect, which has acquired a handful of tech services distributors (TSDs) over the last four years. The deal also represents another domino falling in the field of national TSDs, after PlanetOne and TCG agreed to deals last year. AppDirect beat out a competitive field of suitors, including multiple national TSDs and one IT distributor, to purchase TBI.
AppDirect leaders say they will marry TBI’s longstanding relationships with technology advisors (agents) and suppliers that historically operated in the telecom world, with AppDirect’s deep marketplace of more than 1,000 providers. Many of those providers deal in SaaS, a portfolio offering which AppDirect executives say agents can help their customers adopt. AppDirect executives have described its vision as a “relationship-based marketplace,” in which partners guide end customers through technology purchasing decisions on AppDirect’s platform.
Keep up with the latest channel-impacting mergers and acquisitions in our M&A roundup. |
AppDirect’s Nicolas Desmarais
AppDirect chairman and CEO Nicolas Desmarais called the acquisition a “crowning achievement” for his company.
“By combining the power of our platform and our entire ecosystem with TBI’s approach to the advisor-business relationship, we can provide a level of service for advisors that goes well beyond what has been achieved before,” Desmarais said.
Personnel Impact
In the meantime, dozens of layoffs have already taken place at TBI, with many occurring on Monday. Sources close to the matter indicated that at least 58 positions have been eliminated, with potentially more on the way. Many former employees have already posted about their job cuts.
When asked how AppDirect is handling duplicate roles, chief operating officer Renée Bergeron told Channel Futures that AppDirect’s “tremendous growth base” will keep the company from having to choose in many cases. She pointed to StrataCore’s recent decision to move all of its operations to the AppDirect platform.
AppDirect’s Renee Bergeron
“There’s plenty of opportunity for people from TBI and from AppDirect,” she said. “The sheer size of the company and the pace at which we’re growing will really help us navigate through this.”
An AppDirect spokesperson told Channel Futures that the combined organization is approaching 1,000 employees. Many of those employees come from previously acquired companies, including NeoCloud, WTG, Telegration, MicroCorp, CNSG and ItCloud.ca.
Scroll through the 12 images above to see comments from Bergeron and get deeper information on the sale of TBI.
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