When Best Buy announced plans to acquire mindSHIFT Technologies today, the $167 million deal raised numerous questions about the managed services and cloud services markets. Here are the top nine questions MSPmentor will be exploring in the hours and days ahead.
1. What Was the Multiple?: Best Buy purchased mindSHIFT for $167 million. We’re poking around now to see if we can determine a multiple/valuation on the deal.
2. Distant Cousins?: Will there be any synergies between mindSHIFT and Best Buy’s Geek Squad?
3. More M&A?: Will Best Buy continue mindSHIFT’s merger and acquisition heritage, or will mindSHIFT cease to make new acquisitions now that Best Buy is holding the purse strings?
4. Earn Outs: mindSHIFT acquired numerous MSPs over the past few years. Two recent deals involved mindSHIFT purchasing Alpheon and Orbit. The big question: How does Best Buy purchasing mindSHIFT potentially impact earn outs for the the Alpheon and Orbit management teams?
5. Shopping Around?: The Bank Street Group was mindSHIFT’s “exclusive financial advisor” on the deal. Does that mean The Bank Street Group was helping mindSHIFT to shop its business around for a potential sale?
6. From Managed to Cloud Services?: mindSHIFT earlier this year began to reposition itself increasingly as a cloud services provider. How is that repositioning effort going?
7. Next Moves?: mindSHIFT CEO Paul Chisholm and his management team apparently will remain in place as part of the deal, and mindSHIFT will retain its corporate brand. So what are Chisholm’s big priorities for the next three to 12 months?
8. Industry Impact: mindSHIFT was one of the key “buyers” of MSPs in the past two to three years. Will the Best Buy-mindSHIFT deal help or hurt MSP consolidation and MSP valuations?
9. Counter Moves: Staples also owns an MSP business, called Thrive Networks. Can we expect more Big Box retailers to take a close look at the MSP market and make acqusitions?
MSPmentor will be back with more perspectives on the Best Buy-mindSHIFT deal shortly.
Read More About This Topic
Share This Post
Posted In: Acquisitions | Mergers & Acquisions | MSP Mergers and Acquisitions | North America
Tags: Best Buy | Best Buy Acquires mindSHIFT | Best Buy buys mindSHIFT | Managed Services Acquisition | Managed Services Merger | mindSHIFT | MSP Acquisition | MSP Merger
Interact: Add a Comment | Trackback Link | Permalink
Subscribe: RSS Feed
Take a look at our 
This is a continuation of Best Buy’s push to offer “services” to the business community. Back in 2007, Best Buy bought a telecom services concern called Speakeasy, and although they ended up selling that asset, it looks like they’re decided to try again with managed services. The premise being that Best Buy possesses very significant distribution capabilities through which to deliver managed services to small businesses.
“Exclusive financial advisor” doesn’t really shed any light on the type of process that mindShift was running….if any at all. It doesn’t necessarily mean the company was being shopped, i.e. that they were running a sale process. It simply means that was mindShift’s sole investment banker in this transaction.
Hi Rodrego,
Thanks for your readership and the comment. But mindSHIFT has essentially confirmed that the company was looking for new investors to help one or more legacy investors exit. mindSHIFT made the statement in a note to customers today.
Admittedly, that doesn’t mean mindSHIFT was on the seller’s block. But it does mean mindSHIFT was (A) likely trying to determine its current market value and (B) trying to determine which potential bidders would be willing to pay such a valuation.
-jp
Joe – what are your thoughts on the impact to the SMB channel (Reseller/VAR’s)?. I’ve got to believe stuff like this puts the squeeze on the little guy. There is something to be said for the IT guy on his lunch hour breezing by Best Buy to buy a security appliance, having the GeekSquad come over and install it, and being able to add on a managed services contract to support it.
Would you agree? Do you think a company like Best Buy is capable of the marketing/sales coordination to make that a reality?
Jeff Hine
Jeff,
As a consumer, I do know this: Best Buy’s newspaper ads are the first thing I read each Sunday. And I do think there’s a connection between consumers and SMB IT.
1. Will we see mindSHIFT services publicly marketed in Best Buy stores? Perhaps not.
2. Will we see Best Buy calling on customers who purchase numerous PCs, etc., to see if they need managed services? I suspect yes.
Still, I hesitate to sound the alarm over Best Buy/mindSHIFT. The SMB channel has faced numerous threats for more than two decades. And each time, a new profitability model emerged for the partners…
Also of note: I don’t think Best Buy wants mindSHIFT to be a low-cost provider of commodity IT services. Best Buy is already fighting thin margins in the consumer tech market. So Best Buy wants healthy IT services margins. In theory that means Best Buy won’t launched a price war with local MSPs and VARs…
Those are my opinions. But I could be off the mark… Would love to hear from some more MSPs who have successfully competed with mindSHIFT and defended their home (local) turf in recent years.
-jp
This is huge for the MSP industry. I think the fallout from this will take a while to be fully felt. I really hope someone at Best Buy has a clue and avoids the price war that could further erode margins.
I know MindShift is using OnForce to do some of their managed services installs so I wonder if they will now be send GeegMobiles out to configure network trunking?
Matthew Adkins
http://www.vanguardtech.net
Matthew,
I don’t think Best Buy will position mindSHIFT for a price war. My guess is that Best Buy wants mindSHIFT to maintain existing margins while finding even higher-margin IT services to offer…
-jp
This deal has already been tried by Cisco and has proven itself to be a bad model, so not really sure why Best Buy and/or mindshift wishes to venture down the same path.
Andy, Thanks for your readership. I see the Best Buy-mindSHIFT relationship different than Cisco’s present and previous efforts in the MSP market.
- Cisco is an IT vendor that has always worked closely with channel, so sorting out a services and cloud strategy involves some delicate work.
- Best Buy, in contrast, has a consumer IT services play (GeekSquad) and wants to extend that into the SMB market, which already purchases a ton of IT goods from BestBuy stores. So mindSHIFT could be a natural fit, though I think mindSHIFT will need to work hard to ensure BestBuy doesn’t mess up the mindSHIFT model.
-jp