Watkins plans to build super VAR
Former Teksys head has big plans for the mid-market space with his BlackHawk Investment PE business
Channel veteran Alan Watkins is looking to snap up a number of mid-market resellers to build a super VAR in the space.
Watkins, who this year stepped down as managing director of LAR Teksys to focus on his private equity venture Blackhawk Investments with partner Kevin Lewis, told CRN there is a gap for a larger scale player.
Speaking exclusively to CRN, Watkins said: “There are smaller resellers that have a piece of the mid-market, but I don’t think there is a reseller big enough or competent enough to satisfy mid-market requirements across multiple vendors.
“I think there is over capacity in the reseller marketplace and some of the people that started their businesses four to 10 years ago have been through a couple of cycles of boom and bust which becomes tiring.”
Watkins said he is in a position to identify and buy some of those resellers that are not sure which direction to take their businesses, or are not keen to face the prospect of “another five years of struggle and sleepless nights”.
“We want to talk to these companies,” he said. “We see an opportunity to aggregate three or four resellers in particular vendor ecosystems and bring them together while taking some of the costs out. This will leave a stronger balance sheet and reassure customers that the reseller will be there for years to come.
“We certainly don’t expect to get deals done at the first meeting and would caution resellers to think through the reasons they want to sell carefully. The owners can choose to stay involved in the business, or retire completely and spend time on the beach," he said.
Watkins added that some players are still overvaluing themselves, expecting 10-15 times EBITDA as a sale price, but warned that realistically, most firms “will be lucky” to get six-to-eight times EBITDA.
Martin Hellawell, managing director of Softcat, said Watkins was more than capable of carrying out his plans, but questioned the need for a mid-market super VAR.
“Alan is an impressive guy with a lot of experience and is the kind of person to do this, but my concern is that I don’t think there is a requirement for it.
"If you look at the likes of Insight, Kelway and ourselves, for example, we are all a decent size and operate in the mid-market. We are doing everything that our customers ask of us and anything else we partner with like-minded players. I have never met any customers that said ‘if only there was an organisation with a bigger turnover’.