MSPmentor

Craig Guice remains on the acquisition trail. His company, outsourceIT, a well-known managed service provider, has snapped up Galvin & Associates to gain deeper expertise in unified communications, VoIP and network connectivity. Here’s the update plus a look at what’s driving all this MSP M&A activity.

During the recent IT Nation conference in Orlando, outsourceIT CEO Craig Guice seemed to be in an upbeat mood. He indicated that the September 2010 merger with Bald Eagle Technologies was generating profitable results. But Guice wasn’t resting on his aurels. During the conference Guice was working the phone and navigating details of another targeted acquisition — this one involving Galvin & Associates. Financial terms of this buyout were not disclosed.

In a prepared statement Guice said the deal increases outsourceIT’s commitment to the Triad area of North Carolina. Also, Galvin & Associates CEO Mike Galvin will join the outsourceIT team. Guice also seems to be focused on multiple vertical markets — particularly healthcare, government contractors, software development, legal, construction, housing management, trade associations, non-profits, financial and education.

Meanwhile, outsourceIT’s decision to acquire Galvin & Associates for unified communications expertise sounds timely and logical. During several recent MSP-centric events, numerous MSPs mentioned that they were taking a closer look at the VoIP market. Some of the MSPs mentioned a commitment to promoting and selling desktop handsets (IP phones) in order to gain recurring revenues from hosted PBX systems.

Mergers, Acquisitions and Deals: Oh My

Consolidation in the managed services market seems to have accelerated in recent months. What’s driving the consolidation? A few possibilities include:

• Potential concerns about the cloud making 12 to 15 percent of the IT channel disappear, predicts Forrester Research.
• Increasing competition between established MSPs.
• So-called entrepreneurial fatigue, which seems to be impacting some MSPs that are five years and older.
• Roll-ups such as All Covered scouring multiple US regions for targeted acquisitions.
• Vertical market specialists such as HEIT and Simpler-Webb joining together to expand their reach.
• MSP peer group members looking across the table from one another and realizing they may be more successful if they merge.
• The emergence of consulting organizations — such as Cogent Growth Partners, MSPXchange and Weaver & Associates – that seek to assist MSPs with potential M&A activity.

We’re trying not to hype the M&A activity… especially since it’s  difficult to pinpoint company valuations. Plus, M&A motivations vary from deal to deal.

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