At the most recent Canadian Channel Chiefs Council (C4) board meeting Rick Reid, president of Tech Data Canada said that solution providers are working very hard to “pretty themselves up” so they can become more attractive to a potential buyer.
The channel community has gone through an unprecedented year of mergers and acquisitions. CDN has reported on 16 deals involving the CDN Top 100 Solution Provider members. To say that’s a crazy number is an understatement.
So what is happening? Why so much activity? It really comes down to this simple question. What is the risk tolerance of the channel partner? Solution providers know full well they have to move with the times and embrace the digital transformation. There customers are asking – and in some cases – begging for help. But are today’s top solution providers able to actually help them? And, also are they willing to invest the millions of dollars necessary to equip themselves with the knowledge, expertise, people resources and solutions to make that happen for the customers?
2015 will go down in history as a tipping point year. This is the year channel partners had to either fish or cut bait. And, it looks like plenty have cut bait. Now Reid also made the point to the C4 board of directors that some of the leaders of the channel are at a stage in their careers where they want to get out and enjoy their life. Nothing wrong with that. Take for example Harry Hart of Hartco/Metafore who is 87 years of age. He has over the past few years divested his vast holdings highlighted by the mega Compugen/Metafore deal.
While others such as Scalar Decisions of Toronto have looked to enhance their portfolio of offerings or expand geographically. Scalar has done three major acquisitions in the past 18 months. There is a reason why both Paul Kerr and Roger Singh of Scalar are very happy in this photo below. It’s because they have acquired three excellent organizations in Mainland Information Systems, Eosensa and 3vis, a Montreal-area solution provider that specializes in digital entertainment creation and media. They have stuck when the iron is hot and I can see them benefiting long term because of it.
Then there are the American corporate raider types. This maybe an unfair comparison I admit but companies such as New Signature seemingly have come from nowhere to acquire two of the top Microsoft partners in Canada with CMS Consulting and Imason. To be fair I don’t really see New Signature as an American corporate raider type. I got a chance to meet two of their senior executives and they were great to deal with. They understand the Canadian market better than most and the deals they constructed with CMS and Imason are partnerships and a way to establish roots in the Canadian market.
There has been Canadian acquisition activity of American firms too such as the Contax Inc. of Toronto purchasing California-based SAP partner Aptelis, Inc.
But my point here is we have seen foreign style deals such as Japanese printing and imaging vendor Konica Minolta acquire IT Weapons of Brampton, Ont.
My sense here is that these deals will not stop at the end of 2015. They are going to continue. However, going into 2016 if you are a solution provider interested in selling your business the valuations may change. Right now you have motivated buyers who are interested in growing and want to be stars in the digital transformation trend. These companies like Scalar and New Signature are smart enough to be at the forefront and have snapped up the best companies available. That may not be the case when we get deep into 2016.
Three quick hits before I go. Speaking of the Canadian Channel Chiefs Council, the C4 will be hosting two workshops from Bruce Stuart of ChannelCorp.
They will be taking place on Dec. 8th and 9th at the Old Mill in Toronto. The first one is called Executing the Partner Pivot and is a one-day interactive workshop in which he will lay out the blueprint for how successfully transform reselling and consulting businesses to a cloud, SaaS, MPS or other recurring revenue business model.
The second one called Driving Cloud Channel Growth in 2016 will also be a one-day interactive workshop examining the current state of progress in the development of cloud/SaaS/MPS partner and channel strategies and partner ecosystems.
Synopsys, Inc. announced that Howard A. Schmidt, former cyber advisor to U.S. Presidents Barack Obama and George W. Bush, has been named Synopsys’ security advisor. It’s a newly established position and Schmidt will be advising Dr. Chi-Foon Chan, president and co-CEO of Synopsys on a broad range of security-related matters.
Maxta, a provider of hyper-converged solutions named Andrew Perry it’s new Senior Vice President of Sales, responsible for driving sales and revenue during the company’s current hyper-growth phase. He reports directly to Maxta CEO Yoram Novick.