The top 10 VAR acquisitions of 2018
This year saw a veritable M&A frenzy with some notable resellers getting scooped up
This summer witnessed a frenzy of M&A in the channel, and that let up only slightly in the latter half of the year.
Here, we count down the top 10 most notable acqusitions of 2018, ranked in order of deal cost or, if that has not been disclosed, the expected revenue generated from the combined companies.
10. RedPixie acquired by HPE
HPE snatched up Shoreditch-based Microsoft Azure partner RedPixie in April, and stated that it would be folded into the vendor's Pointnext services division.
Rationale: HPE cited the fact that the hybrid IT consulting and cloud native development market is now worth $6bn (£4.6bn) globally and is growing at over 18 per cent - according to analyst McKinsey - as rationale for the deal.
HPE's hybrid cloud services division had been struggling in its Q2, and the acquisition of the reseller was made in order to boost its cloud advisory prowess.
"RedPixie have helped their customers migrate legacy systems to the cloud, speed up the adoption of data analytics, and drive cost cutting, while accelerating time to market and increasing agility…," said HPE Pointnext SVP Ana Pinczuk.
"With this acquisition, we will continue to expand our comprehensive hybrid IT portfolio and will be even better positioned to help our customers build new digital experiences and drive better business outcomes now and into the future."
Added scale: After acquiring fellow born-in-the-cloud reseller Cloudamour in 2015, RedPixie doubled its headcount to 75.
What they said: "RedPixie is a UK-based cloud consulting company with deep Microsoft Azure expertise, which perfectly complements CTP's strong AWS relationship," CEO Antonio Neri said in a Q2 earnings call.
"We are excited about the capabilities these two acquisitions bring to HPE and are already seeing them open doors to new and bigger deals
The top 10 VAR acquisitions of 2018
This year saw a veritable M&A frenzy with some notable resellers getting scooped up
9. Provista UK acquired by PCM
US-based reseller PCM started 2018 off with a bang by acquiring Glasgow-based Cisco Gold partner Provista UK in early January.
The company arrived to UK shores in May 2017 and four months later made waves by acquiring £3m-revenue, Liverpool-based cloud services provider The Stack Group.
Rationale: Along with its Cisco Gold accreditation, Provista is also an Avaya Saphire partner and VMWare Solutions Provider. It also brings PCM additional offices in Aberdeen and Birmingham.
At the time of the deal, PCM - which ranked 68th in CRN's Top VARS 2018 - stated that the deal would add to its "opportunity to extend its growth of the existing managed services and multi-lingual global service desk within the European region".
Combined scale: PCM is headquartered in Sheffield, and with the acquisition of both Provista and The Stack Group, now has a headcount of 240. It also opened a new office in Wellingbrough (pictured right).
What they said: PCM president Jay Miley stated at the time: "We are continuing to follow our global strategy to bring our leading North American solutions to the UK, and this acquisition further expands one of our largest vendor relationships through the acquisition of a UK Cisco Gold Partner."
Comparex acquired by SoftwareONE
The licencing solution provider space saw considerable consolidation when SoftwareONE purchased rival Comparex. Financial details of the deal were not disclosed, but the merger is expected to see the new licencing giant manage "€10bn in sales".
Rationale: At the time of the deal's announcement, SoftwareONE UK MD Zak Virdi told CRNthat the merger was partly based on where the market was headed.
"Both companies have different segments of the market that we engage with and I feel that provides opportunities on both sides to leverage our capabilities and enhance our service opportunities to customers," he said.
"Both organisations have a software-orientated approach and - as we've seen the market develop with more software-defined services and technical requirements - this opens up huge new markets to us which we previously may not have had access to, whether that is around unified comms or network infrastructure."
Neil Lomax, worldwide sales strategy boss at SoftwareONE, told CRN that boosting its headcount and having a well-skilled staff was another reason for the acquisition.
"As technology is moving so fast, getting good skills into an organisation is really difficult and one of the benefits of this transaction is that we get even more skills into both companies," he explained at the time.
Combined scale: Comparex ranked 25th in CRN's Top VARs of 2018, with revenues of £143.7m, while SoftwareONE was one place behind at 26, reporting turnover of £137.9m.
The combined entity will have a headcount of 5,500, spanning 200 locations in 88 countries.
The Comparex name will eventually be subsumed by SoftwareONE, which will continue to have its HQ in Stanz, Switzerland.
What they said: SoftwareONE chairman Daniel von Stockar said: "Along with our investor KKR, we spent considerable time intensely searching for the ideal partner and are convinced we have found it with Comparex.
"Together, we will be driven by SoftwareONE's core values as we continue to transform the industry."
The top 10 VAR acquisitions of 2018
This year saw a veritable M&A frenzy with some notable resellers getting scooped up
8. Content Code acquired by IT Lab
Manchester and London-based IT Lab snapped up £12m-revenue generator Content and Code in October, in a deal of which the financial details were not disclosed.
With backing from private equity house ECI partners, IT Lab has made a number of acquisitions in recent years, including Manchester-based Microsoft partner JMC and Green Field Technology in 2015, and cybersecurity business Perspective Risk in 2017.
Rationale: IT Lab CEO Peter Sweetbaum (pictured below right) told CRN at the time that Content and Code's capabilities with the Microsoft stack, especially around Office 365 and Sharepoint, attracted interest.
"[Content and Code] is extremely well regarded in the marketplace, but also within Microsoft itself," he said.
"And when Tim (Wallis, Content and Code CEO) and I first spoke four or five months ago we realised quite quickly that there was a strong cultural fit between the two organisations."
For his part, Wallis (pictured left) explained that his reasoning for selling up was due to increasing client demand for managed services.
"Customers wanted us to digitally transform them - which is where we are very strong - but they also wanted someone who can run the solution for them after it has been transformed," he stated.
"That's where we said ‘we need to invest in this, and either buy a company or join one'. And the best company we found by far was IT Lab."
Combined scale: IT Lab hit revenues of £34m in its most recently filed accounts on Companies House, while Content and Code generated £12m in revenues for the year ending 31 December 2017. IT Lab claims the deal will creates a £60m-revenue powerhouse with 550 staff and 700 mid-market and enterprise clients.
What they said: Sweetbaum told CRN that the company intends to scale revenues to around £100m, partly achieved by more acquisitions.
"As an organisation that is private equity backed, we are looking to build to a scale and those sorts of numbers you're talking about are the right target," he said.
"But more fundamentally we want to have the right capabilities to deliver to our customers well. Frankly the financial performance and scale of the business is secondary to delivering what customers need."
The top 10 VAR acquisitions of 2018
This year saw a veritable M&A frenzy with some notable resellers getting scooped up
7. eBECS acquired by DXC Technology
Chesterfield-based Microsoft partner eBECS was gobbled up by DXC Technology in April.
DXC was formed in 2017 when Hewlett Packard Enterprise (HPE) span off its services business and merged it with CSC, which had acquired a 40 per cent stake in eBECS that same trading year. eBECS was then acquired in its entirety and added to DXC's Eclipse practice.
Since its formation, DXC has been on an M&A splurge, also snapping up London-based ServiceNow partner TESM in November.
Rationale: eBECS was acquired in order to bolster DXC's Microsoft Dynamics365 capabilities. Hayden Stafford, Microsoft VP, welcomed the news at the time, saying: "Microsoft customers are looking for a trusted partner to help accelerate their digital transformation journeys and empower them to seize the opportunities ahead.
"The expansion of DXC's Microsoft practice is another great step forward in our global collaboration and consolidates DXC's position as a leading Microsoft Dynamics 365 Gold partner."
Combined scale: eBECS reported revenue of £34.8m for the year ending 31 March 2017 - a £1.7m increase on the previous year.
Kevin Hall, eBECS CEO, said of the buyout:"DXC's maturity as a global systems integrator and respected Microsoft partner is an ideal fit for eBECS.
"Being part of DXC means having the strength and certainty of a long-term business partner with the global infrastructure, high-calibre resources and experience to allow us to truly lead our customers on their digital transformation journeys.
What they said: "The acquisitions of eBECS…will enhance our ability to address client needs and add significant value to DXC's Eclipse global business.
"It allows DXC to expand and enhance its cloud-first business with software, services, systems integration and cloud offerings - particularly in financial services, retail, manufacturing and public sector verticals," stated Troy Richardson, DXC Technology senior VP.
The top 10 VAR acquisitions of 2018
This year saw a veritable M&A frenzy with some notable resellers getting scooped up
6. Esteem Systems acquired by Roc Technologies
Last year, Roc Technologies secured a £10m investment from the British Growth Fund to fuel its organic and inorganic growth, and part of that funding was used to acquire IT project management firm City Change Management. The money was also used to acquire Wetherby-based Esteem Systems.
Rationale: Roc CEO Matt Franklin cited Esteem's managed services capabilities as a key factor behind the deal , stating that, when combined with Roc's own, it creates a "strong annuity-driven business". Managed services is expected to make up 30 per cent of the combined business.
Combined scale: Esteem Systems generated revenues of £36m for its year ending 30 June 2017, according to accounts filed on Companies House, while Roc placed 97th in CRN's Top VARs 2018 with revenues of £40.3m, and has a staff of 89. The newly combined firm is expected to hit a revenue target of £80m next year.
What they said: "The coming together of Roc and Esteem Systems is 100 per cent complementary in portfolio, customers, industry focus, and geography, and I am absolutely thrilled that together we can extend new value to our joint customers and accelerate our next phase of growth through a truly differentiated customer offer," said CEO Franklin.
The top 10 VAR acquisitions of 2018
This year saw a veritable M&A frenzy with some notable resellers getting scooped up
5. RedstoneConnect's MSP and SI businesses acquired by Excel IT
RedstoneConnect took the unusual step of selling off its managed service and systems integration divisions in May. London-based Excel IT snatched them up in a deal worth £21m.
Rationale: RedstoneConnect sold the two arms in order to focus solely on its software development business, which contributed £5.3m to the company's overall revenue of £47.6m. Since the sale, RedstoneConnect has rebranded as Smartspace Software. The firm now aims to become the "leading international" workspace management software firm, and plans to invest in both organic and inorganic growth to facilitate this.
Combined Scale: Excel IT reported turnover of £23.4m in the year ending 31 March 2017. It has now rebranded itself as ExcelRedstone.
What they said: "Since the acquisition of Connect IB in 2016, we have been developing our smart software solution capabilities with a particular focus on OneSpace, our occupancy management software solution," said Mark Braund (pictured right), then-CEO of RedstoneConnect.
"We firmly believe that the significant global demand for workspace management solutions, coupled with the market-leading suite of services already being deployed within our software division, creates an ideal base from which to accelerate our growth.
"Our strategic focus on creating greater levels of recurring, annuity-based revenues, and improving the earnings visibility of the group, underpins the board's commitment to becoming a fast-growing workspace management software company, delivering long-term shareholder value."
The top 10 VAR acquisitions of 2018
This year saw a veritable M&A frenzy with some notable resellers getting scooped up
4. OCSL acquired by Cancom
Despite exiting the UK market in 2012, German reseller giant Cancom dipped its toes back in UK waters with the purchase of unified comms MSP and Cisco partner Ocean Blue Intelligence in March, before making a bigger splash by acquiring OCSL for £29m.
The West-Sussex based reseller ranked 44th in CRN's Top VARs 2018, generating revenues of £85.9m covering its year ending 31 March 2017.
Rationale: Cancom intends to use the HPE and Microsoft Azure partner as a UK hub.
When it signed the contract to buy OCSL's parent company, The Organised Group, Cancom (whose CEO Klaus Weinmann is pictured below) stated that the deal "represents a determined move towards a substantial UK market presence and the international growth of the business".
Combined scale: OCSL has a headcount of 2017 and generated revenues of £85.9m covering its year ending 31 March 2017, placing 44th in CRN's Top VARs 2018.
Cancom (founded by CEO Klaus Weinmann, pictured left) is publicly listed on the Frankfurt Stock Exchange and has a turnover in excess of €1bn.
What they said: Thomas Volk, Cancom president, said: "Our aim is to expand our cloud and managed services business and this requires international structures."
"The close co-operation of both new British members of the Cancom family together with the total group, not only offers numerous opportunities in the UK, such as introducing existing and potential clients to our IT infrastructure management software AHP.
"It also allows us to build a UK-based hub to serve international clients even better than today and it intensifies Cancom's transformation towards becoming an international company."
The top 10 VAR acquisitions of 2018
This year saw a veritable M&A frenzy with some notable resellers getting scooped up
3. Brookcourt Solutions acquired by Shearwater Group
Cybersecurity partner Brookcourt Solutions was acquired by Shearwater Group for the princely sum of £30.3m.
Rationale: According to its website, the firm employs a "'buy, focus, grow' strategy to deliver enhanced value through our acquisitions and help to solve the core scaling issues faced by SME information security and cyber security companies".
David Williams, Shearwater chairman, stated at the time: "One of the key elements of our buy-and-build strategy is that the management teams stay with the business and become active parts of the enlarged group.
"As well as being strategically and operationally a major development for us, this transaction will also bring a step change in our scale and breadth of offering, and notably it will make us cashflow-positive following completion.
Combined scale: Juniper partner Brookcourt reported revenues of £22.8m for the year ending 31 March 2017, and ranked 142 in CRN's Top 250 VARs 2017.
The Red-Hill reseller joins two-factor authentication vendor SecurEnvoy, as well as cybersecurity consultancies Xcina and GeoLang as part of Shearwater's M&A spree in recent years.
What they said: "This unity provides us with the resources, additional industry expertise and support to scale the business and deliver a broader solutions offering to our existing and prospective customers.
"We are delighted to be joining Shearwater at such a pivotal time in Brookcourt's development and we very much look forward to realising our ambitions for the business as part of the wider group," said Brookcourt CEO Phil Higgins.
The top 10 VAR acquisitions of 2018
This year saw a veritable M&A frenzy with some notable resellers getting scooped up
2. Comparex acquired by SoftwareONE
The licencing solution provider space saw considerable consolidation when SoftwareONE purchased rival Comparex. Financial details of the deal were not disclosed, but the merger is expected to see the new licencing giant manage "€10bn in sales".
Rationale: At the time of the deal's announcement, SoftwareONE UK MD Zak Virdi told CRNthat the merger was partly based on where the market was headed.
"Both companies have different segments of the market that we engage with and I feel that provides opportunities on both sides to leverage our capabilities and enhance our service opportunities to customers," he said.
"Both organisations have a software-orientated approach and - as we've seen the market develop with more software-defined services and technical requirements - this opens up huge new markets to us which we previously may not have had access to, whether that is around unified comms or network infrastructure."
Neil Lomax, worldwide sales strategy boss at SoftwareONE, told CRN that boosting its headcount and having a well-skilled staff was another reason for the acquisition.
"As technology is moving so fast, getting good skills into an organisation is really difficult and one of the benefits of this transaction is that we get even more skills into both companies," he explained at the time.
Combined scale: Comparex ranked 25th in CRN's Top VARs of 2018, with revenues of £143.7m, while SoftwareONE was one place behind at 26, reporting turnover of £137.9m.
The combined entity will have a headcount of 5,500, spanning 200 locations in 88 countries.
The Comparex name will eventually be subsumed by SoftwareONE, which will continue to have its HQ in Stanz, Switzerland.
What they said: SoftwareONE chairman Daniel von Stockar said: "Along with our investor KKR, we spent considerable time intensely searching for the ideal partner and are convinced we have found it with Comparex.
"Together, we will be driven by SoftwareONE's core values as we continue to transform the industry."
The top 10 VAR acquisitions of 2018
This year saw a veritable M&A frenzy with some notable resellers getting scooped up
1. Apogee acquired by HP Inc.
August saw the largest deal of the year, with HP Inc buying managed print giant Apogee in a deal valued at £380m.
The Maidstone-based reseller will continue to operate as an independent subsidiary to its parent company, and UK channel boss Neil Sawyer affirmed that Apogee would not receive preferential treatment from its new owner.
Rationale: Speaking at the Canalys channel forum in Barcelona in October, HP CEO Dion Weisler (pictured right) said the buyout was a "defensive move".
"They are a great company; they have been growing aggressively, organically and inorganically, they have a lot of solutions and an intimate understanding, and they were highly acquisitive in their own right," he said.
"We looked at this and said: if we don't acquire them, one of our competitors will. In this business, you are talking about machines in field, and a contract is three, five or seven years in length. We would be yielding that machine in field population for a very long time."
Combined scale: Apogee saw revenues of £208.4m for the year ending 31 December 2017, ranking 16th in CRN's Top VARs 2018, and boasts a headcount of 1,125. HP's Q4 results saw revenue grow 10 per cent to $15.4bn (£12bn).
What they said: At the time of the announcement, Enrique Lores, president of imaging and print at HP, said that the buyout was a part of the vendor's strategy to advance in the contractual office business space.
"Apogee is the largest independent print provider in Europe and it is a very well-managed company… we were attracted to the capabilities that they have in the services and solutions space. They are a great platform for us to expand our business," he said.
""We remain committed to growing our business through value-added resellers and this is a complement to this strategy.
"We think that it will help us grow faster and achieve more scale, and we really want to make sure channel partners know that this is not an alternative [to them]."