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Park Place channel chief: 'We're going to see a faster pace of consolidation post-pandemic'

Firms own M&A strategy not hampered by virus outbreak, says Jeff McCullough

The channel should not expect consolidation to slow down as a result of the COVID-19 pandemic, according to Park Place Technologies' global VP of channel sales.

Jeff McCullough - who joined the company in March this year - said he believes the rate of M&A activity in the channel will actually accelerate as a result of the pandemic, though he predicted it will be at the expense of smaller companies.

The third-party maintenance firm is itself no stranger to M&A, acquiring Buckinghamshire-based MCSA last year to bolster its UK presence. In 2018, the acquisitive US firm snapped up companies in Ireland, Latin America and Singapore.

"I do think the outcome of what we're going through right now is going to be an even faster pace of consolidation in the industry, in terms of partners merging with other partners and consolidation," he told CRN.

"What was interesting to see just in the six months prior to February, it wasn't just one partner acquiring another partner, there were several examples of two or three partners coming together and in the private equity space a private equity owner of a couple of partners acquiring another partner and then bringing them all together to form one new, big entity.

"I think right now, critical mass matters and I think the situation we're going through right now is going to create an environment where the largest partners are probably the best aligned to survive and come out on the other side."

McCullough said that Park Place's own aggressive M&A strategy hasn't been hampered by the global pandemic.

"The value we bring right now is the same value we brought before the pandemic," he elaborated.

"In general, though, it really hasn't changed our approach and it hasn't changed our strategy. We're looking for good opportunities where we can make acquisitions that expand our value proposition, expand our reach and can allow us to grow the business.

"It really hasn't impacted [our strategy], other than we just are prudent like every company would be prudent in times where the outlook can be a little bit murky. But for us, it's an opportunity to really find some strong value in the market and put our investment dollars to work to help the company grow even faster."

McCullough also cautioned against customers and partners expecting strong growth for the foreseeable future, warning that they should instead be buckling up for the crisis to last at least a year, if not longer.

"Where these manufacturers see the market going resonates directly with our channel partners; the partners are seeing that actually show up in their day-to-day business," he explained.

"I think the world has accepted that this is going to be a year of economic decline in some form or fashion. So I don't think the question is ‘Can we recover immediately?' I think the question is ‘How do we handle the situation where we aren't growing as fast as we thought we would and our budget can't support the requirements that we need and have?'"

He noted that HPE's recent results show challenges not just around customer IT spend but supply chain challenges as a result of the global pandemic. This leads to more opportunity for third party maintenance firms such as Park Place, he added.

"I bring it back to what our part of the value proposition to the solution. We can help these folks do a better job of managing through the crisis, whether it shows up financially in their numbers or in their business or whether it shows up through the supply chain challenges. We've got a whole set of tools in our box that can directly solve those problems," he said.

"We're bringing a portfolio of solutions that can really help partners, we have things for them to sell right now. If they're struggling to get other products or find budget for a customer's infrastructure refresh, we can certainly offer a different alternative. These are solutions that partners can sell right now."