XChange EMEA day 2: M&A in the channel, AI to the rescue and the importance of a Plan B
The second day of XChange EMEA delivered key business insights as well as some existential questions around AI and strategy
The second day of XChange EMEA 2024 covered the gamut from picking the right private equity buyer to succession planning post-acquisition, to ensuring sustainability in the supply chain and more.
Attendees engaged with cybersecurity-focused presentations from Cisco and Kaseya and took part in boardroom sessions full of lively discussions with their peers.
M&A in the channel
The first keynote of day two focused on the accelerating acquisition dynamics in the channel and how channel businesses can ensure they pick the right PE buyer and ensure a smooth business transition.
"Financial investors, especially private equity funds, are some of the most active buyers in the IT services sector, often preferring businesses with recurring revenues and diversified client bases," Julian Riedlbauer, partner at M&A consultancy Drake Star Partners told attendees at the conference, outlining some key differences between acquisitions by other channel firms versus private equity.
"Strategic buyers look for acquisitions that enhance their offerings or provide access to new clients and markets, while private equity investors focus on building value over a set investment period before exiting," he added.
These included access to the PE investor's network, the potential domain expertise of a specialist PE house, and the varying cycles – three, five or seven years - on which private equity typically expects to increase the value of a business before reselling to another investor.
These can provide a business with a lot of flexibility in comparison to an acquisition by an industry buyer, the audience heard. But picking the right PE firm, with an appropriate network of contacts, a buying cycle that matches the founder or owner's preferred timeframe and an overall cultural match, is crucial, according to Riedlbauer.
"Running a structured M&A process and engaging multiple buyers can help you achieve the highest possible price for your business by creating competitive tension among bidders," he explained, while reassuring audiences that IT and services businesses especially are considered valuable by PE, due to the relative stability of the business.
"IT services and MSPs are highly attractive to buyers due to their stability, industry size, and recurring revenue streams, which are highly valued in M&A transactions."
Riedlbauer reassured the audience that, even though the economy is going through a period of volatility, the acquisition landscape in IT remains vibrant and there are usually several potential buyers to choose from should a business owner choose to go the private equity route.
"Last year, the IT services segment saw nearly 1,800 M&A transactions, underscoring the sector's dynamic activity and growth potential driven by trends like hybrid and multi-cloud, cybersecurity, and AI, he said.
"To achieve the best sale price for your business, it's essential to engage multiple potential buyers, creating competition and leveraging an M&A advisor to navigate the complex process and maximize value."
Read on for insights on AI and automation from Transputec CEO Sonny Sehgal and a recap of the final keynote of the day, presented by Olympic gold medallist Maarten van der Weijden...
XChange EMEA day 2: M&A in the channel, AI to the rescue and the importance of a Plan B
The second day of XChange EMEA delivered key business insights as well as some existential questions around AI and strategy
Will genAI replace us?
The answer may be a resounding yes, depending on what you do for a living. In the afternoon, Sonny Sehgal, Transputec CEO, took the stage to show attendees the results of some of the AI experiments he had conducted since the breakout success of ChatGPT in 2022.
As genAI technologies continue to evolve, businesses are inundated with promises of transformative capabilities. However, amidst the noise, the crucial question emerges: how can organisations navigate the GenAI hype to deliver solutions that genuinely enhance business value?
This talk delved into strategies for discerning genuine value propositions from mere buzzwords, emphasising the importance of crafting genAI solutions that align with concrete business objectives.
Sehgal shared insights from several case studies, illustrating the practical applications and outcomes of genAI implementation.
"The real challenge isn't the technology itself," he remarked.
"It's about identifying where genAI can actually make a difference in your operations and drive tangible business impact."
Transputec itself has dramatically reduced costs in its customer service department by implementing chatbots.
Sehgal emphasised the need for a strategic approach: "Businesses must focus on specific pain points and opportunities where genAI can provide measurable improvements. It's not about jumping on the latest trend, but about thoughtful integration and alignment with your business goals."
The discussion also covered common pitfalls and how to avoid them.
Sehgal cautioned against the temptation to adopt genAI technologies without a clear plan: "Implementing genAI without a well-defined objective can lead to wasted resources and missed opportunities.
"It is crucial to have a roadmap that outlines the intended outcomes and how success will be measured."
At the end of his presentation, Sehgal expertly kept the audience's attention by sharing a video he had created from the conference, using only self shot images and AI tools allowing him to create a catchy jingle and edit the images and video to match. Check out the video here.
Maarten van der Weijden on the importance of having a plan B
The day concluded with Olympic gold medalist Maarten van der Weijden taking to the stage to tell the crowd his story of resilience in the face of hardship.
Having survived a battle with lymphoma in 2003, Maarten, already an accomplished long-distance swimmer, qualified for the 10 km open water marathon race at the 2008 Summer Olympics in Beijing.
At the tail end of XChange EMEA, the audience heard Maarten's vivid recollection of how, despite the odds, and despite his own perception of his chances, he managed to narrowly win out at the race and achieve the coveted gold.
"If you have that goal set high enough, it's the only uncertainty you have that you'll run into obstacles," Maarten said, as he recalled how he had to overcome not only his physical condition post-chemotherapy, but also stiff competition from swimmers he considered to be objectively better.
Training, according to him, was only one part of the equation. Motivation was another. But, contrary to the usual advice that Maarten had received up until that point – every achievement is a result of individual choices – he told the audience how he had to learn to work within circumstances outside of his control.
"Standing on the podium with the gold medal around my neck, I think about the journey that brought me here.
"The sacrifices, the pain, the uncertainties – it was all worth it for this moment.
"And I realise that while we can't always control the outcome, we can control our dedication and our response to the challenges we face, Maarten concluded.
To read more of the insights from Day 2, including how channel businesses can improve the sustainability of their supply chain or ensure their staff is ready for an acquisition, click here.