Crayon's first year as a publicly listed company has been a "fairly positive experience" according to CEO Rune Syversen.
The Oslo-based software asset management and licensing partner announced plans to list on the Oslo Stock Exchange almost exactly a year ago.
The plan was to raise NOK 300m (£27.75m) to leverage its debts and fuel further growth. It came after the firm spent around NOK 280m between 2014 and 2016 on developing new IP and expanding globally.
But Crayon got off to a dreadful start in its first few months as a public company. Syversen said Crayon's share price took a big hit in the first three months following its IPO, as Microsoft announced changes to its licensing programmes that would affect partners.
The stock market reacted, sending Crayon's shares tumbling by 30 per cent after its first quarter on the Oslo Stock Exchange.
"Obviously, it meant the results in our first quarter on the stock exchange were a little below expectations and the stock market reacted on that and drove the share price down by 30 per cent, which made me and my co-founder go out and acquire more shares," he said.
But Crayon rebounded over the following two quarters, and shares had risen by as much as 30 per cent by the end of May to reach NOK 22.35 per share.
The tough opening months of trading weren't the only surprise for Crayon during its first year of public ownership.
At the peak of its share valuation in May, two of Crayon's largest global competitors - SoftwareONE and Softline - snapped up 10 per cent stakes in the company.
At the time, Syversen told CRN sister publication Channelnomics Europe that interest from its competition is testament to the attractiveness of Crayon as a company. Although neither rival held a big enough share of Crayon to be deserving of board positions, Syversen said he would have to take a stance if either firm looked to grow their stake.
Another major change to Crayon's shareholder structure came just months later, in August, when its original and largest investor decided to sell up.
The investor in question, Norvestor, had privately owned Crayon and had engineered the IPO last year, retaining a 20 per cent stake.
Now American investor One Equity Partners (OEP) has stepped in and acquired Norvestor's shares. This isn't OEP's first channel investment of late; it snapped up Italian integrator Lutech last year, promising to spring the firm into the German market through M&A.
"I think Norvestor were fairly happy with their return and now we have an American private equity that acquired the shares. They may actually help us in our future consolidation of the market, which I anticipated would start earlier than it has," said Syversen.
"I don't know our new investor well since they acquired the shares from Norvestor. I looked them up and I've talked to them, but it is likely they're an investor with a long-term ambition. They seem to think there is a consolidation opportunity in this space, which is why they invested."
Syversen has long been anticipating a rapid pace of consolidation among Microsoft licence service providers (LSPs) as margins from selling licences continue to retract, forcing its key players to invest in adjacent technology areas.
Further changes to Microsoft's Cloud Solution Provider programme as of 1 October, which will mean partners will need to invest in additional services if they want to continue buying directly from Microsoft, will hasten an ongoing wave of consolidation among the vendor's largest partners, according to Syversen.
"Microsoft as an example are now closing most of their tier-2 partners. I think they're also realising that the strategy to spread thin was not the right one and that they need to go deeper with fewer partners. They've signed a strategic investment agreement with us among a few global partners," he said.
"This is a product of what is happening with cloud. It is a huge consolidator and a huge opportunity and I think it will also change the whole ecosystem.
"It's only natural that the big guys get bigger and the small ones vanish, because they are not capable of investing in digitising their transactional business. You have to be able to automate the provisioning, the billing and do more for less using technology. The smaller guys do not have the means nor the opportunity to invest in platforms for provisioning," he said.
Syversen said Microsoft's changes are a positive for Crayon, as the removal of partners from the ecosystem will lead to new opportunities.
"But also the ones that are left are also more focused," he said. "The quality increases, but there will be fewer players fighting."
Crayon will continue to be an active consolidator in the market, said Syversen, but will not be looking to bolster its transaction business like some of its competitors. The CEO said he is actively looking to acquire cloud providers and companies with attractive intellectual property that Crayon can bundle and resell with its own services.
"There are lots of opportunities out there and we are keeping our eyes and ears open," he said. "We are now in a good position to acquire."
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