The dual CEOs of licensing heavyweight Crayon have told Channelnomics Europe that they're looking to acquire a services firm "in the short-term", hot on the heels of its pan-European rivals SoftwareONE and Comparex merging.
Group Holding CEO Torgrim Takle (pictured) said the strategy to acquire is a matter of ensuring market longevity.
"Two of the leading companies in our industry, SoftwareONE and Comparex, came together, so that underlies the consolidation trend in our industry," he said.
"We have already seen in the last three years that the number of partners of all the global software vendors - such as Microsoft, IBM and so forth - is shrinking very fast meaning that it's more business for the bigger players.
"Many small players will not be able to make the investments that are needed."
Size isn't everything
Crayon has a headcount of 1,200 in 23 countries, and claims it covers 80 per cent of its addressable market. In its FY2017, it logged revenues of NOK 7.3bn (£680m).
However, Takle insisted that Crayon's advantage is not just in its size.
"Yes, scale is important but so is the reach and the kind of service mix you have.
"Most of our rivals are transactional by nature, not necessarily engaging deep with customers to optimise business value from their new technologies.
"We believe that Crayon is a unique consolidation vehicle given our strong presence in the service space."
Who is being targeted?
Takle detailed what profile of firm he is looking for in a prospective acquisition target.
"One type would be more of the traditional reseller model where the company is more transactional in software licenses being procured and sold, but where we can bring those customers over to our own IP and cloud provisioning platforms.
"The other type would be service IP companies that have a strong technology adjacent to our core offering."
An example could be cloud consumption monitoring solutions or any other type of application solution related to managing software spend. These companies are typically local in nature and lack the distribution muscle that we have."
"Those are the two categories of companies that we're looking right now."
Crayon's reaction to the SoftwareONE and Comparex merger
last week SoftwareONE announced it had bought 100 per cent of Comparex to create a €10bn-revenue, 5,500 headcount licensing giant.
As well as being a rival, SoftwareOne also holds a nine per cent stake in Norway-based Crayon.
Founder and Group CEO Rune Syversen said that he doesn't believe that SoftwareONE's board will seek to increase its stake.
"Comparex is such a big investment for them, that they will be occupied with that for the next three to five years. So, for us, them acquiring Comparex is one of the biggest opportunities we've seen over the past five years," Syversen said.
"It's a really exciting time for us."
Tweet using #CRNawards to join our live coverage of tonight's Channel Awards
We weed out the key information from the networking giant's Q1 numbers
CRN's Women in Channel role model Logicalis COO Natalie Matthews explains the impact of mentorship, 'imposter syndrome' and why the channel has to do a better job at selling the industry to young people
Mohit Aron claims Cohesity is having the same impact on the back-up market as the smartphone on its own space, while taking shots at the likes of Veeam