Logicalis talks dos and don'ts of M&A one year on from Q Associates acquisition

CRN sat down with partner execs Alex Louth and Andy Griffiths to get an update on the takeover of Q Associates

Logicalis bought out Microsoft and Cisco partner Q Associates last August to bulk up its UK&I data centric IT service capabilities.

The deal marked Logicalis' first acquisition in six years.

One year on from the merger, CRN caught up with Alex Louth, CEO of UK&I, and Andy Griffiths, Director of UK&I at Logicalis to find out how the marriage between the businesses is panning out, and where the MSP outfit stands on more M&A.

It's been one year since your acquisition of Q Associates. How has the integration gone?

Alex

"Integrations are always really, really difficult because the teams didn't make the decision to sell and the Logicalis teams didn't make the decision to buy. So you then rely exclusively on people that weren't part of the decision.

"For the first six months, we decided to break nothing. We left the Q team on their systems and processes, but during that time we planned about how to bring it together.

"We've all seen acquisitions that have come together overnight. You don't get everyone moved over correctly and it causes a big problem.

"Up until January, we pretty much left everyone the same and moved everyone over to our systems on 1 March, which was Logicalis' start of the year.

"But equally, there's never a perfect time to do an acquisition."

Andy

"There have been some challenges. This isn't something Alex and I have done often and Q had never been acquired before.

"The only real challenge that we've had was the integration of systems and the timing of the integration with what was happening within Logicalis at the time."

Should we expect more acquisitions from Logicalis in 2023?

Alex

"Great question. I think you can only answer it based on what there is in the market that's going to make you better.

"As we all know, the M&A world has been so busy, and there's been some fantastic businesses acquired over the last three years, especially.

"Though I would say it's calmed down a bit in the last six months.

"If something came along that would make us better we absolutely would. We haven't got money burning a hole in our pocket. We're using it in the right way, the most sensible way.

"At the moment, there are some areas that I would probably look at, but equally, there's been some really good acquisitions already happening in the market. A couple of prospects that I would have gone with a couple of years ago have already been set up. So we've got to be sensible and make the right decision.

"A bad acquisition can disjoint your go-to-market, disjoint your quality of culture, and morale in the business. So you've got to be really really careful.

"I do see companies that have done five - ten acquisitions in the past three years and I just think, what journey are the teams having? Because let's be honest, whenever you do an acquisition, yes, of course you want the existing customers. But equally, you want the seriously clever people that make the business what it is.

"For us, if the right things are there, then absolutely. But I'm not having M&A meetings every day because I want to do something. It's just got to be right.

"Our portfolio at the moment is very solid. We know what we're doing. We know what we're talking to our customers about. We're not all things to all men. We're very focused."

What would catch your eye for an M&A deal?

Alex

"Security is interesting. Of course it's interesting. But equally, it can be quite a minefield for our customers. So that's an interesting play.

"Managed services is really interesting to absolutely everyone on the market at the moment. If you don't have an MRR or an ARR or that sort of recurring revenue stream as we know, that's how the whole market is valued at the moment."

How do you plan to drive growth in the UK&I?

Alex

"We're going to sell more.

"We're one year in with our relationship and our coming together of Logicalis and Q.

"There's still a load of Q customers that we've not completed our connectivity story with.

"We've found that our customers view the world as a lot smaller post-Covid. So connecting our sites, connecting our people, connecting our data, and connecting our customers' sites with data are really key for us.

"There's a huge amount of maturity to achieve and focus on what we already do really, really well. And I don't think we need to start spinning up a separate business. I think we just need to do what we do at the moment which is absolutely connecting everything, absolutely managing data, and making sure the whole thing is really, really secure."

What are some of the challenges Logicalis is facing?

Alex

"Growth is always a challenge.

"There is a people challenge. This industry of ours in the UK, we're people-led.

"It's about getting that balance of experienced vs new.

"There is a balance that needs to be created. And growing your own is really important in not just our market, but all markets. And making sure we've got the right engagement with the universities. We've got the right engagement with young teams to come and be able to drive this business into the next 10,20, 30 years.

"So what we're trying to do is do a lot of work around education and succession planning."