The 14 biggest reseller and MSP acquisitions of 2021
What were the biggest deals of the year? CRN rounds up the top 14 acquisitions from 2021
M&A in the UK channel hit fever pitch in 2021.
Microsoft partner Content+Cloud sold up to Advania just last week to close off a year that has seen a phenomenal uptick in M&A deals.
Whether driven by the pandemic, the growing importance of technology or changes to capital gains tax, private equity has been the driving force behind much of this year's M&A activity.
A large part of the year was dominated by platform acquisitions or bolt on acquisitions from private equity businesses that were looking at the IT services space with interest.
By mid-March, there had already been at least seven platform acquisitions by private equity houses, and there were five deals in that month alone.
The end of Q1 saw more than 30 bolt-on acquisitions take place in the reseller and MSP space.
Performanta, Codestone, Phoenix Datacom and Systal all received private equity backing, while Node4 changed private equity hands.
The rest of the year saw more high-profile partners acquired by private equity, many of which feature on this list.
But as we approached the latter half of this year, M&A activity began to shift towards trade sales, with some of the largest deals of the year coming during the last few months.
Private equity is responsible for most of the sales on this list to fulfil the buy-and-build strategies of companies including Onecom, Nasstar and Wavenet, while others were to fuel the international ambitions of overseas-based businesses.
Let's take a look at the 14 largest acquisitions by revenue in the UK this year:
14) QUANTIQ
Announced: 20 October
Revenue: £31.1m
Acquired by: Avanade
The background:
Insight's former EMEA and APAC boss Stuart Fenton began a new venture called QUANTIQ in the summer of 2014. A year later, he vowed to balloon the business into a £25m run-rate outfit within the next two years.
By the end of 2020, the company had revenues of £31.1m and was a recognised leader in Microsoft's ERP and CRM suites.
Fenton left the QUANTIQ business following the sale to Avanade but has since started a new investment and advisory firm called Woolf Partners.
Rationale:
Microsoft Dynamics specialist QUANTIQ was bought up by joint Accenture and Microsoft venture Avanade in October this year.
Avanade says that the deal will add 300 new staff to its existing Business Applications team and "significantly extend" its Dynamics 365 capabilities.
What was said:
In an interview with CRN, Fenton described selling up to Avanade and walking away from the business was a "bittersweet thing" but said that he "walked away with immense pride in having worked with the best team I've ever worked with in my career."
The channel veteran said he was always sceptical about selling to private equity, but felt encouraged by a trade deal with Avanade given its track record with other acquisitions such as Altius in 2020.
"I've never put the company up for sale but I've had lots of people inquire. Avanade was the first time that I'd met an organisation that had the same shared values, goals and objectives and passion for the people that I do. From those initial conversations, it was incredibly easy to consider being part of their larger family."
The 14 biggest reseller and MSP acquisitions of 2021
What were the biggest deals of the year? CRN rounds up the top 14 acquisitions from 2021
13) Olive Communications
Announced: 11 February
Acquired by: Onecom
Background:
Olive Communications received £10m in financial backing from Business Growth Fund (BGF) at the beginning of 2016. At the time, the Mitel and Vodafone partner was reported to have around £30m in revenues and around 150 staff.
The business has been trying to transform itself from a telephony provider to a fully-fledged MSP in a bid to increase its profits. The strategy started yielding results in its fiscal year ending 31 January 2020, with the firm posting profits of £552,000 after sinking to a £496,000 loss the previous year.
Rationale:
Onecom's founder, Darren Ridge, said that the pandemic has prompted a change in the working patterns both in the UK and globally, creating an increased demand for integrated cloud communications and digitalisation.
The deal will significantly benefit Onecom's partners, customers, employees and stakeholders, he said, and give the company access to a larger talent pool.
When the deal was announced, Onecom described Olive as its "closest rival". The acquisition would bring together two of Vodafone's top partners in the UK and create a business with combined revenues of £140m.
What was said:
"Our ultimate objective this year is to help our customers continue to navigate the pandemic, and to be market-ready to transform, adapt and evolve their businesses with innovative cloud communications technologies that will empower UK PLC," said CEO Martin Flick.
The 14 biggest reseller and MSP acquisitions of 2021
What were the biggest deals of the year? CRN rounds up the top 14 acquisitions from 2021
12) FourNet
Announced: 10 June
Acquired by: Palatine
Revenue of acquired business: £32.1m
Background:
The first platform acquisition on this list, FourNet is a cloud comms provider that counts 10 Downing Street, the cabinet office and the Bank of England among its customers.
Founded in 2005 and based in Manchester, the FourNet business achieved a three-year growth rate of 55 per cent before being acquired by Palatine in June.
Rationale:
Like other cloud comms providers on this list, FourNet said that the pandemic has changed the way we work and created new demand for remote working solutions.
The majority investment from Palatine will enable FourNet to remain "at the forefront of the industry" by meeting the needs of its customers and make additional acquisitions to grow its capabilities.
What was said:
Senior director at Palatine, Andy Strickland, said that the firm will look at buy-and-build opportunities to grow the business further.
"We see significant opportunity for FourNet to strengthen its position in the marketplace as the go-to cloud services supplier to the public sector," he said.
"As part of the strategy we will look at selected buy and build opportunities, but we also see great potential for organic growth.
The 14 biggest reseller and MSP acquisitions of 2021
What were the biggest deals of the year? CRN rounds up the top 14 acquisitions from 2021
11) Excell Group
Announced: 5 November
Acquired by: Wavenet
Revenue of acquired business: £38.5m
Background:
Networking, connectivity and unified comms provider Wavenet hit the M&A trail this year after selling a majority stake to investor Macquarie. After acquiring NTS Communications and Internal Systems earlier in 2021, Wavenet bought up Excell Group in November.
Rationale:
Excell Group was Wavenet's largest acquisition in its history and pushed its revenue run rate past £100m. The deal gives Wavenet a "true London presence" as well as new capabilities in flexible workplaces and cloud.
What was said:
"Excell is the largest and most exciting acquisition we have made to date, bringing new services and a talented team into the Wavenet Group," said CEO Bill Dawson.
The 14 biggest reseller and MSP acquisitions of 2021
What were the biggest deals of the year? CRN rounds up the top 14 acquisitions from 2021
10) Trams
Announced: 22 July
Acquired by: Econocom
Revenue of acquired business: £40.3m
Background:
Econocom told CRN in March that it was looking to acquire a UK reseller with between £50m and £150m revenue, and four months later did just that.
Trams employs around 40 staff and has been in business for more than 30 years, counting Apple as its top vendor partner.
Rationale:
Econocom's search for a UK acquisition was primarily to build its presence in the country's private enterprise market to complement its strengths in education and public sector.
The goal is to become Europe's largest digital contractor, according to MD Frances Weston, and a hardware focused reseller with a strong UK footprint would give it a foot in the door of the market.
What was said:
"We are very pleased with this transaction, which will significantly strengthen our presence in the United Kingdom, a strategic development area for the group. We are also delighted to resume a new cycle of external growth after two years of consolidation. This acquisition opens a new era for Econocom as a digital general contractor," said Weston.
The 14 biggest reseller and MSP acquisitions of 2021
What were the biggest deals of the year? CRN rounds up the top 14 acquisitions from 2021
9) Pure Technology Group
Announced: 8 April
Acquired by: Fulcrum
Revenue of acquired business: £41.9m
Background:
Leeds-based MSP Pure Technology Group was acquired by Dutch tech investor Fulcrum in April.
The investment was soon followed by plans to open up a new "state-of-the-art" office over the summer which has capacity for up to 250 staff.
The office, which cost Pure £1.1m, will fuel its future growth aspirations, the company said, and allow staff to embrace hybrid working.
Rationale:
A platform acquisition for Fulcrum, the tech investor is no stranger to the channel, having previously invested in German MSP Sysback as well as US resellers Pivot Technology Solutions and Converge Technology Solutions.
Although Pure's CEO Stephen O'Brien said that the business has had many approaches over the years, it said that Fulcrum will propel the MSP into the "top echelon" of the UK's IT services market.
What was said:
"From the start, we were very impressed by PTG. Not only because of the products and excellent service to customers, but also by their culture, innovative approach and people. We see clearly the expanding capabilities we can develop together in the areas of secure remote work and enterprise service management to create a successful future together," said Fulcrum CEO Shane Maine.
The 14 biggest reseller and MSP acquisitions of 2021
What were the biggest deals of the year? CRN rounds up the top 14 acquisitions from 2021
8) Edenhouse
Announced: 16 February
Acquired by: Accenture
Revenue of acquired business: £43.1m
Background:
Edenhouse has long held a strong reputation in SAP's channel and bills itself as the largest independent SAP Platinum partner in the UK.
Based in Birmingham, the company works with customers across sectors including pharmaceutical, public sector and manufacturing.
Rationale:
Edenhouse's team of 220 staff joined Accenture's SAP Business Group in the UK in order to meet increased demand for SAP's cloud-based solutions in the UK market as a result of the pandemic.
It was one of many acquisitions for Accenture in 2021, and came just days before its acquisition of AWS partner Infinity Works.
What was said:
"Being part of Accenture will provide amazing opportunities for our staff and our clients. We have similar shared values, including putting business outcomes at the heart of everything we do to deliver 360 degree value for clients and leveraging our deep relationships with SAP," said Edenhouse CEO Paul Solomon.
"We're excited to be able to bring the combination of our people, technology and industry excellence to take digital transformation to the next level for our clients."
The 14 biggest reseller and MSP acquisitions of 2021
What were the biggest deals of the year? CRN rounds up the top 14 acquisitions from 2021
7) 9 Group
Announced: 8 March 2021
Acquired by: Onecom
Revenue of acquired business: £43.3m
Background:
The largest of Onecom's flurry of acquisitions in 2021, 9 Group is a business telecoms provider founded in 2001.
The acquisition was the fourth for Onecom since it received backing from LDC in July 2019 and came just a month after its Olive Communications buyout that also featured in this list.
Rationale:
The deal adds 5,000 customers to the Onecom business as well as 450 indirect channel partners to the Onecom business.
The deal also balanced out Onecom's portfolio, giving it a 50/50 split between mobile and non-mobile communications solutions.
Onecom said that investing in its own channel business will become paramount following the acquisition.
What was said:
"We have a well-established footprint in enterprise and the mid-market and the acquisition will help us, through valued partners, drive sales of our exceptional products and services to businesses of all sizes, with a high degree of proximity to customer need that only a channel can deliver to SMBs at this scale," said Onecom CEO Martin Flick.
The 14 biggest reseller and MSP acquisitions of 2021
What were the biggest deals of the year? CRN rounds up the top 14 acquisitions from 2021
6) Blue Chip Customer Engineering
Announced: 1 February
Acquired by: Service Express
Revenue of acquired business: £53.5m
Background:
Bedford-based IBM datacentre maintenance services firm Blue Chip Customer Engineering sold up to US firm Service Express in February 2021 following the passing of its founder Brian Meredith in October 2020.
The business claims to manage 10 per cent of the UK's banking traffic.
Rationale:
Service Express said the acquisition would give it an international springboard and grows its business by 40 per cent at a stoke. The deal will enable the US company to make further acquisitions in the EMEA market.
Service Express says that it plans to scale out Blue Chip's managed services expertise across the US and internationally.
The 14 biggest reseller and MSP acquisitions of 2021
What were the biggest deals of the year? CRN rounds up the top 14 acquisitions from 2021
5) ANS Group
Announced: 18 June
Acquired by: Inflexion
Revenue of acquired business: £54.4m
Background:
ANS Group has been on a multi-year mission to transform itself from a Flexpod reseller to a public cloud and digital transformation specialist by "burning the boats" of its traditional reseller business.
CEO Paul Shannon told us that management kicked off the process in late 2020 and considered both a trade sale as well as private equity.
The deal, which was rumoured to be worth £200m according to Sky News, will see ANS Group combine with fellow Manchester-based peer UKFast with Shannon taking the helm of the combined business.
Shannon characterises the deal as an MBO, with ANS management reinvesting in the business and staying on to evolve it further.
Rationale:
Shannon said that it "felt like the right time" to sell the business following its rapid transformation over the last four to five years.
Inflexion were one of the early favourites in the sale process, Shannon said, and showed a keen interest in the business early on.
The deal will allow ANS' management to go to the next level, according to the CEO, who recently told CRN that company is aiming to become the biggest digital transformation partner in the UK and could even begin to expand into the rest of Europe.
What was said:
"The sellers were ready to hand it over and let us go and run it, and build it into the next stage of what ANS can be. The management team were absolutely desperate to get a grip of it and just go again. With the market the way it is now, it's just so ripe for what we do. It just felt like this is the right time: let's get it done now so we can go and take it to the next level.
"Inflexion are well-known in the market for heavy investment and future investment."
The 14 biggest reseller and MSP acquisitions of 2021
What were the biggest deals of the year? CRN rounds up the top 14 acquisitions from 2021
4) CCL Computers
Announced: 12 April
Acquired by: Tactus
Revenue of acquired business: £54.83m
Background:
Tactus secured a £40m war chest for M&A over the summer from Chrysalis Investments to fulfil its ambitions of becoming a "globally recognised" gaming and consume computing group.
Before that, it bagged £12.5m in funding led by Liverpool-based investment firm Arete Capital Partners in April.
Rationale:
The acquisition of CCL created a consumer business with £125m in revenues, according to Tactus, and propels its presence in the gaming market.
Tactus specialises in sourcing, branding and supplying Windows 10 devices and wearable tech to retailers including John Lewis and Amazon, but the acquisition will give it new e-commerce capabilities and its first direct route into customers.
The transaction was backed by Tactus' private equity investor and cost around £11.25m.
What was said:
"A core part of our acquisition strategy over the next 12 months is to identify and bring together fantastic businesses that complement one another and can really drive our growth. CCL is a perfect example of this, with its longstanding reputation in the gaming market built on the outstanding talent it has at its disposal, as well as its dedication to providing the best quality products to consumers," said Tactus CEO Scott Brenchley.
The 14 biggest reseller and MSP acquisitions of 2021
What were the biggest deals of the year? CRN rounds up the top 14 acquisitions from 2021
3) Cancom UK and Ireland
Announced: 29 July
Acquired by: Telefonica Tech
Revenue of acquired business: £77.9m
Background:
German reseller Cancom first began mulling a sale of its UK and Ireland business in May in order to put all of its efforts into its home DACH market.
Cancom entered the UK in 2018 when it acquired OCSL, and then went on to acquire Novosco for £70m in 2019.
Its sale to Telefonica was for the huge sum of €398m, representing 15.8 times its EBITDA for full year 2020.
Rationale:
According to UK and Ireland CEO Martin Hess, Telefonica Tech has picked out Spain, Germany, Brazil and the UK as priority markets where it wishes to secure a leadership position in cloud and cybersecurity.
Hess said that he expects a huge amount of investment to go into the UK business to help it achieve that goal.
What was said:
"The big difference between Telefonica Tech and Cancom is the level of investment they'll make to help us grow in the UK and Ireland. The ambition is to be the leader in cloud and cyber in the UK and Ireland. And I think they've got the wherewithal to help us get there," said Hess in an exclusive interview with CRN.
The 14 biggest reseller and MSP acquisitions of 2021
What were the biggest deals of the year? CRN rounds up the top 14 acquisitions from 2021
2) Content+Cloud
Announced: 9 December
Acquired by: Advania
Revenue of acquired business: £84.5m
Background:
The most recent acquisition on this list, and also one of the biggest, Content+Cloud claims to be a master in all three of Microsoft's clouds - Modern Workplace, Azure and Dynamics.
The business is a product of a several MSP acquisitions which came together between 2018 and 2020 including IT Lab, Content and Code, Mirus IT and Perspective Risk.
The company received backing from private equity firm ECI Partners five years ago, with its sale to Advania representing a natural end to their investment cycle.
Rationale:
Advania itself received backing from Goldman Sachs at the beginning of the year, which its CEO Mikael Noaksson said gave it the financial clout and networking expertise to look for M&A outside of its home market in the Nordics.
The deal creates a northern European VAR and MSP powerhouse with £800m revenues and 3,500 staff across six countries in the Nordics and the UK.
In a recent interview with CRN, Noaksson said that Content+Cloud will operate via a "decentralised" model, with decision making remaining with its UK management team.
What was said:
"We have this strong ownership behind us that can do bolt-on acquisitions in existing countries but also look at new countries as well," said Noaksson in an interview with CRN.
"We are able to be a little more aggressive now. But it is a pragmatic approach; the important thing is not to acquire companies for the scale, but for the people, the skills and the services that can attract more talent to grow organically."
The 14 biggest reseller and MSP acquisitions of 2021
What were the biggest deals of the year? CRN rounds up the top 14 acquisitions from 2021
1) KCOM National IT services business
Announced: 25 June
Acquired by: Nasstar
Revenue of acquired business: £166.6m
Background:
The largest acquisition by revenues on this list, Nasstar was chosen as the preferred brand for the formerly named GCI business following a flurry of acquisitions by the MSP.
GCI made 20 acquisitions since it was founded in 2000, its largest of which was AIM-listed Nasstar which it acquired in January 2020 for almost £80m.
Rationale:
KCOM Business had revenues of £166m for its year ending March 2020 and around 223 staff.
The deal with Nasstar will allow Hull-based KCOM to focus on its broadband business and grow its presence in retail and wholesale markets, it claimed.
The comms provider's national IT services business includes managed services, hosting, connectivity and voice will form a "vital part" of Nasstar's growth strategy.
It will make Nasstar one of the UK's largest independent MSPs, with 1,200 staff across the country.
What was said:
"We recognise the value and opportunities the combination of KCOM's people, capabilities and customers from the national ICT services business of KCOM represent, and we are confident our strategy will turn this potential into long-term growth and success," said Nasstar CEO Wayne Churchill.