Category Archives for "Managed Services News"

Jun 03

‘Dark Clouds on the Horizon’ as European Channel M&A Continues

By | Managed Services News

The channel is consolidating at a fast rate, but the M&A landscape could soon change dramatically.

Economic trends in Europe indicate that private equity firms will likely offer lower multiples to prospective sellers.

So says John Holland, managing director of Corporate Finance Associates. Holland, whose investment banking firm advises midmarket businesses on M&A, said macroeconomic factors are depressing share prices even amongst the hottest technology companies. Thus, companies looking to sell their business shouldn’t be surprised if they receive lower valuations than what their peers reported getting last year.

Holland will participate in a session called “Channel M&A: Everything Today’s Leaders Need to Know,” alongside Total IT Technology Solutions’ Steve Dunmall and August Equity’s Mehul Patel. The session will happen at Channel Partners Europe, 14-15 June, in London.

In this preview, Holland shares insights with Channel Futures about trends impacting consolidation and private equity in Europe.

Channel Futures: How would you summarize the state of channel M&A in Europe? What trends are you seeing among both vendors and partners?

CFA's John Holland

CFA’s John Holland

John Holland: The volume and aggregate value of M&A transactions in Europe in 2021 were extraordinary. According to Pitchbook, the trend continued into [the first quarter of] 2022 with record volume and aggregate value. The robust demand for technology businesses with recurring revenues has elevated valuations to lofty levels as certain sectors have undergone rapid consolidation. However, there are dark clouds on the horizon.

Join 500+ MSPs, resellers and vendors at Channel Partners Europe, 14-15 June, in London. Part of London Tech Week, the event will feature 50+ channel leaders, innovators and experts. We’re expecting 1,500 attendees with whom you can discuss channel best practices and next-gen technology. Register now!

CF: Private equity is one of the most notable forces engaging in channel consolidation right now. What’s one important thing prospective sellers should know about these private equity firms?

JH: Debt is the fuel that propels acquisitions. The low interest rates of the past decade have driven a record volume of mergers and acquisitions. Private equity firms utilize leverage to acquire businesses. Leverage boosts the return on investment in ordinary macroeconomic scenarios. However, as the global economy faces extraordinarily high inflation, interest rates are rising dramatically worldwide, thereby elevating the cost of capital for private equity firms. Meanwhile, the risk of recession seems to be rising as higher fuel costs dampen economic activity. In this macroeconomic environment with higher risk of recession and higher interest rates, private equity firms are likely to adopt financial models with lower valuations. Business owners who are contemplating selling their businesses need to understand that the high multiples on EBITDA (earnings before interest, taxes, depreciation, and amortization) of the past will likely decline.

The public equities market for technology shares might be a harbinger for valuations of privately held technology services firms. Even hot cybersecurity and cloud technology companies like Crowdstrike, Zscaler, and Microsoft have depressed share prices now. In the European IT services area, major players like SoftwareOne, Computacenter and Softcat are way below their 52-week highs.

CF: What’s one key question a prospective seller should ask a prospective buyer, and vice versa?

JH: Sellers of businesses spend an enormous amount of time providing prospective acquirers with financial documents and other confidential details about the sellers’ businesses. Before providing any prospective acquirer with any information, a confidentiality agreement should be executed. Prospective sellers of businesses should ask prospective acquirers to demonstrate the financial capacity necessary for the acquisition. Also, it is important for the seller of a business to understand the goals of the acquirer, the potential synergy with the acquirer, the acquirer’s expectation for the role (if any) of the seller in the acquired business, and the acquirer’s plan (if any) to integrate the seller’s business into a larger entity. Sometimes acquisitions involve the seller rolling over equity into the acquirer’s business. Rolling over equity requires extensive due diligence on the acquirer’s business – just like in any other investment.

CF: Is there anything else you’d like to add?

JH: The best way for a business owner to maximize the value of his/her business on the sale of the business is to have an investment banker orchestrate a confidential auction-like process that pits prospective acquirers against each other. Negotiations between a business owner and a private equity firm are asymmetrical. That’s because private equity firms have teams of legal and financial advisers with years of experience in mergers and acquisitions. Sellers of businesses should level the field by seeking legal and financial guidance from experts.

Jun 03

‘Dark Clouds on the Horizon’ as European Channel M&A Continues

By | Managed Services News

The channel is consolidating at a fast rate, but the M&A landscape could soon change dramatically.

Economic trends in Europe indicate that private equity firms will likely offer lower multiples to prospective sellers.

So says John Holland, managing director of Corporate Finance Associates. Holland, whose investment banking firm advises midmarket businesses on M&A, said macroeconomic factors are depressing share prices even amongst the hottest technology companies. Thus, companies looking to sell their business shouldn’t be surprised if they receive lower valuations than what their peers reported getting last year.

Holland will participate in a session called “Channel M&A: Everything Today’s Leaders Need to Know,” alongside Total IT Technology Solutions’ Steve Dunmall and August Equity’s Mehul Patel. The session will happen at Channel Partners Europe, 14-15 June, in London.

In this preview, Holland shares insights with Channel Futures about trends impacting consolidation and private equity in Europe.

Channel Futures: How would you summarize the state of channel M&A in Europe? What trends are you seeing among both vendors and partners?

CFA's John Holland

CFA’s John Holland

John Holland: The volume and aggregate value of M&A transactions in Europe in 2021 were extraordinary. According to Pitchbook, the trend continued into [the first quarter of] 2022 with record volume and aggregate value. The robust demand for technology businesses with recurring revenues has elevated valuations to lofty levels as certain sectors have undergone rapid consolidation. However, there are dark clouds on the horizon.

Join 500+ MSPs, resellers and vendors at Channel Partners Europe, 14-15 June, in London. Part of London Tech Week, the event will feature 50+ channel leaders, innovators and experts. We’re expecting 1,500 attendees with whom you can discuss channel best practices and next-gen technology. Register now!

CF: Private equity is one of the most notable forces engaging in channel consolidation right now. What’s one important thing prospective sellers should know about these private equity firms?

JH: Debt is the fuel that propels acquisitions. The low interest rates of the past decade have driven a record volume of mergers and acquisitions. Private equity firms utilize leverage to acquire businesses. Leverage boosts the return on investment in ordinary macroeconomic scenarios. However, as the global economy faces extraordinarily high inflation, interest rates are rising dramatically worldwide, thereby elevating the cost of capital for private equity firms. Meanwhile, the risk of recession seems to be rising as higher fuel costs dampen economic activity. In this macroeconomic environment with higher risk of recession and higher interest rates, private equity firms are likely to adopt financial models with lower valuations. Business owners who are contemplating selling their businesses need to understand that the high multiples on EBITDA (earnings before interest, taxes, depreciation, and amortization) of the past will likely decline.

The public equities market for technology shares might be a harbinger for valuations of privately held technology services firms. Even hot cybersecurity and cloud technology companies like Crowdstrike, Zscaler, and Microsoft have depressed share prices now. In the European IT services area, major players like SoftwareOne, Computacenter and Softcat are way below their 52-week highs.

CF: What’s one key question a prospective seller should ask a prospective buyer, and vice versa?

JH: Sellers of businesses spend an enormous amount of time providing prospective acquirers with financial documents and other confidential details about the sellers’ businesses. Before providing any prospective acquirer with any information, a confidentiality agreement should be executed. Prospective sellers of businesses should ask prospective acquirers to demonstrate the financial capacity necessary for the acquisition. Also, it is important for the seller of a business to understand the goals of the acquirer, the potential synergy with the acquirer, the acquirer’s expectation for the role (if any) of the seller in the acquired business, and the acquirer’s plan (if any) to integrate the seller’s business into a larger entity. Sometimes acquisitions involve the seller rolling over equity into the acquirer’s business. Rolling over equity requires extensive due diligence on the acquirer’s business – just like in any other investment.

CF: Is there anything else you’d like to add?

JH: The best way for a business owner to maximize the value of his/her business on the sale of the business is to have an investment banker orchestrate a confidential auction-like process that pits prospective acquirers against each other. Negotiations between a business owner and a private equity firm are asymmetrical. That’s because private equity firms have teams of legal and financial advisers with years of experience in mergers and acquisitions. Sellers of businesses should level the field by seeking legal and financial guidance from experts.

Jun 03

‘Dark Clouds on the Horizon’ as European Channel M&A Continues

By | Managed Services News

The channel is consolidating at a fast rate, but the M&A landscape could soon change dramatically.

Economic trends in Europe indicate that private equity firms will likely offer lower multiples to prospective sellers.

So says John Holland, managing director of Corporate Finance Associates. Holland, whose investment banking firm advises midmarket businesses on M&A, said macroeconomic factors are depressing share prices even amongst the hottest technology companies. Thus, companies looking to sell their business shouldn’t be surprised if they receive lower valuations than what their peers reported getting last year.

Holland will participate in a session called “Channel M&A: Everything Today’s Leaders Need to Know,” alongside Total IT Technology Solutions’ Steve Dunmall and August Equity’s Mehul Patel. The session will happen at Channel Partners Europe, 14-15 June, in London.

In this preview, Holland shares insights with Channel Futures about trends impacting consolidation and private equity in Europe.

Channel Futures: How would you summarize the state of channel M&A in Europe? What trends are you seeing among both vendors and partners?

CFA's John Holland

CFA’s John Holland

John Holland: The volume and aggregate value of M&A transactions in Europe in 2021 were extraordinary. According to Pitchbook, the trend continued into [the first quarter of] 2022 with record volume and aggregate value. The robust demand for technology businesses with recurring revenues has elevated valuations to lofty levels as certain sectors have undergone rapid consolidation. However, there are dark clouds on the horizon.

Join 500+ MSPs, resellers and vendors at Channel Partners Europe, 14-15 June, in London. Part of London Tech Week, the event will feature 50+ channel leaders, innovators and experts. We’re expecting 1,500 attendees with whom you can discuss channel best practices and next-gen technology. Register now!

CF: Private equity is one of the most notable forces engaging in channel consolidation right now. What’s one important thing prospective sellers should know about these private equity firms?

JH: Debt is the fuel that propels acquisitions. The low interest rates of the past decade have driven a record volume of mergers and acquisitions. Private equity firms utilize leverage to acquire businesses. Leverage boosts the return on investment in ordinary macroeconomic scenarios. However, as the global economy faces extraordinarily high inflation, interest rates are rising dramatically worldwide, thereby elevating the cost of capital for private equity firms. Meanwhile, the risk of recession seems to be rising as higher fuel costs dampen economic activity. In this macroeconomic environment with higher risk of recession and higher interest rates, private equity firms are likely to adopt financial models with lower valuations. Business owners who are contemplating selling their businesses need to understand that the high multiples on EBITDA (earnings before interest, taxes, depreciation, and amortization) of the past will likely decline.

The public equities market for technology shares might be a harbinger for valuations of privately held technology services firms. Even hot cybersecurity and cloud technology companies like Crowdstrike, Zscaler, and Microsoft have depressed share prices now. In the European IT services area, major players like SoftwareOne, Computacenter and Softcat are way below their 52-week highs.

CF: What’s one key question a prospective seller should ask a prospective buyer, and vice versa?

JH: Sellers of businesses spend an enormous amount of time providing prospective acquirers with financial documents and other confidential details about the sellers’ businesses. Before providing any prospective acquirer with any information, a confidentiality agreement should be executed. Prospective sellers of businesses should ask prospective acquirers to demonstrate the financial capacity necessary for the acquisition. Also, it is important for the seller of a business to understand the goals of the acquirer, the potential synergy with the acquirer, the acquirer’s expectation for the role (if any) of the seller in the acquired business, and the acquirer’s plan (if any) to integrate the seller’s business into a larger entity. Sometimes acquisitions involve the seller rolling over equity into the acquirer’s business. Rolling over equity requires extensive due diligence on the acquirer’s business – just like in any other investment.

CF: Is there anything else you’d like to add?

JH: The best way for a business owner to maximize the value of his/her business on the sale of the business is to have an investment banker orchestrate a confidential auction-like process that pits prospective acquirers against each other. Negotiations between a business owner and a private equity firm are asymmetrical. That’s because private equity firms have teams of legal and financial advisers with years of experience in mergers and acquisitions. Sellers of businesses should level the field by seeking legal and financial guidance from experts.

Jun 03

‘Dark Clouds on the Horizon’ as European Channel M&A Continues

By | Managed Services News

The channel is consolidating at a fast rate, but the M&A landscape could soon change dramatically.

Economic trends in Europe indicate that private equity firms will likely offer lower multiples to prospective sellers.

So says John Holland, managing director of Corporate Finance Associates. Holland, whose investment banking firm advises midmarket businesses on M&A, said macroeconomic factors are depressing share prices even amongst the hottest technology companies. Thus, companies looking to sell their business shouldn’t be surprised if they receive lower valuations than what their peers reported getting last year.

Holland will participate in a session called “Channel M&A: Everything Today’s Leaders Need to Know,” alongside Total IT Technology Solutions’ Steve Dunmall and August Equity’s Mehul Patel. The session will happen at Channel Partners Europe, 14-15 June, in London.

In this preview, Holland shares insights with Channel Futures about trends impacting consolidation and private equity in Europe.

Channel Futures: How would you summarize the state of channel M&A in Europe? What trends are you seeing among both vendors and partners?

CFA's John Holland

CFA’s John Holland

John Holland: The volume and aggregate value of M&A transactions in Europe in 2021 were extraordinary. According to Pitchbook, the trend continued into [the first quarter of] 2022 with record volume and aggregate value. The robust demand for technology businesses with recurring revenues has elevated valuations to lofty levels as certain sectors have undergone rapid consolidation. However, there are dark clouds on the horizon.

Join 500+ MSPs, resellers and vendors at Channel Partners Europe, 14-15 June, in London. Part of London Tech Week, the event will feature 50+ channel leaders, innovators and experts. We’re expecting 1,500 attendees with whom you can discuss channel best practices and next-gen technology. Register now!

CF: Private equity is one of the most notable forces engaging in channel consolidation right now. What’s one important thing prospective sellers should know about these private equity firms?

JH: Debt is the fuel that propels acquisitions. The low interest rates of the past decade have driven a record volume of mergers and acquisitions. Private equity firms utilize leverage to acquire businesses. Leverage boosts the return on investment in ordinary macroeconomic scenarios. However, as the global economy faces extraordinarily high inflation, interest rates are rising dramatically worldwide, thereby elevating the cost of capital for private equity firms. Meanwhile, the risk of recession seems to be rising as higher fuel costs dampen economic activity. In this macroeconomic environment with higher risk of recession and higher interest rates, private equity firms are likely to adopt financial models with lower valuations. Business owners who are contemplating selling their businesses need to understand that the high multiples on EBITDA (earnings before interest, taxes, depreciation, and amortization) of the past will likely decline.

The public equities market for technology shares might be a harbinger for valuations of privately held technology services firms. Even hot cybersecurity and cloud technology companies like Crowdstrike, Zscaler, and Microsoft have depressed share prices now. In the European IT services area, major players like SoftwareOne, Computacenter and Softcat are way below their 52-week highs.

CF: What’s one key question a prospective seller should ask a prospective buyer, and vice versa?

JH: Sellers of businesses spend an enormous amount of time providing prospective acquirers with financial documents and other confidential details about the sellers’ businesses. Before providing any prospective acquirer with any information, a confidentiality agreement should be executed. Prospective sellers of businesses should ask prospective acquirers to demonstrate the financial capacity necessary for the acquisition. Also, it is important for the seller of a business to understand the goals of the acquirer, the potential synergy with the acquirer, the acquirer’s expectation for the role (if any) of the seller in the acquired business, and the acquirer’s plan (if any) to integrate the seller’s business into a larger entity. Sometimes acquisitions involve the seller rolling over equity into the acquirer’s business. Rolling over equity requires extensive due diligence on the acquirer’s business – just like in any other investment.

CF: Is there anything else you’d like to add?

JH: The best way for a business owner to maximize the value of his/her business on the sale of the business is to have an investment banker orchestrate a confidential auction-like process that pits prospective acquirers against each other. Negotiations between a business owner and a private equity firm are asymmetrical. That’s because private equity firms have teams of legal and financial advisers with years of experience in mergers and acquisitions. Sellers of businesses should level the field by seeking legal and financial guidance from experts.

Jun 02

‘Dark Clouds on the Horizon’ as European Channel M&A Continues

By | Managed Services News

The channel is consolidating at a fast rate, but the M&A landscape could soon change dramatically.

Economic trends in Europe indicate that private equity firms will likely offer lower multiples to prospective sellers.

So says John Holland, managing director of Corporate Finance Associates. Holland, whose investment banking firm advises midmarket businesses on M&A, said macroeconomic factors are depressing share prices even amongst the hottest technology companies. Thus, companies looking to sell their business shouldn’t be surprised if they receive lower valuations than what their peers reported getting last year.

Holland will participate in a session called “Channel M&A: Everything Today’s Leaders Need to Know,” alongside Total IT Technology Solutions’ Steve Dunmall and August Equity’s Mehul Patel. The session will happen at Channel Partners Europe, 14-15 June, in London.

In this preview, Holland shares insights with Channel Futures about trends impacting consolidation and private equity in Europe.

Channel Futures: How would you summarize the state of channel M&A in Europe? What trends are you seeing among both vendors and partners?

CFA's John Holland

CFA’s John Holland

John Holland: The volume and aggregate value of M&A transactions in Europe in 2021 were extraordinary. According to Pitchbook, the trend continued into [the first quarter of] 2022 with record volume and aggregate value. The robust demand for technology businesses with recurring revenues has elevated valuations to lofty levels as certain sectors have undergone rapid consolidation. However, there are dark clouds on the horizon.

Join 500+ MSPs, resellers and vendors at Channel Partners Europe, 14-15 June, in London. Part of London Tech Week, the event will feature 50+ channel leaders, innovators and experts. We’re expecting 1,500 attendees with whom you can discuss channel best practices and next-gen technology. Register now!

CF: Private equity is one of the most notable forces engaging in channel consolidation right now. What’s one important thing prospective sellers should know about these private equity firms?

JH: Debt is the fuel that propels acquisitions. The low interest rates of the past decade have driven a record volume of mergers and acquisitions. Private equity firms utilize leverage to acquire businesses. Leverage boosts the return on investment in ordinary macroeconomic scenarios. However, as the global economy faces extraordinarily high inflation, interest rates are rising dramatically worldwide, thereby elevating the cost of capital for private equity firms. Meanwhile, the risk of recession seems to be rising as higher fuel costs dampen economic activity. In this macroeconomic environment with higher risk of recession and higher interest rates, private equity firms are likely to adopt financial models with lower valuations. Business owners who are contemplating selling their businesses need to understand that the high multiples on EBITDA (earnings before interest, taxes, depreciation, and amortization) of the past will likely decline.

The public equities market for technology shares might be a harbinger for valuations of privately held technology services firms. Even hot cybersecurity and cloud technology companies like Crowdstrike, Zscaler, and Microsoft have depressed share prices now. In the European IT services area, major players like SoftwareOne, Computacenter and Softcat are way below their 52-week highs.

CF: What’s one key question a prospective seller should ask a prospective buyer, and vice versa?

JH: Sellers of businesses spend an enormous amount of time providing prospective acquirers with financial documents and other confidential details about the sellers’ businesses. Before providing any prospective acquirer with any information, a confidentiality agreement should be executed. Prospective sellers of businesses should ask prospective acquirers to demonstrate the financial capacity necessary for the acquisition. Also, it is important for the seller of a business to understand the goals of the acquirer, the potential synergy with the acquirer, the acquirer’s expectation for the role (if any) of the seller in the acquired business, and the acquirer’s plan (if any) to integrate the seller’s business into a larger entity. Sometimes acquisitions involve the seller rolling over equity into the acquirer’s business. Rolling over equity requires extensive due diligence on the acquirer’s business – just like in any other investment.

CF: Is there anything else you’d like to add?

JH: The best way for a business owner to maximize the value of his/her business on the sale of the business is to have an investment banker orchestrate a confidential auction-like process that pits prospective acquirers against each other. Negotiations between a business owner and a private equity firm are asymmetrical. That’s because private equity firms have teams of legal and financial advisers with years of experience in mergers and acquisitions. Sellers of businesses should level the field by seeking legal and financial guidance from experts.

Jun 02

‘Dark Clouds on the Horizon’ as European Channel M&A Continues

By | Managed Services News

The channel is consolidating at a fast rate, but the M&A landscape could soon change dramatically.

Economic trends in Europe indicate that private equity firms will likely offer lower multiples to prospective sellers.

So says John Holland, managing director of Corporate Finance Associates. Holland, whose investment banking firm advises midmarket businesses on M&A, said macroeconomic factors are depressing share prices even amongst the hottest technology companies. Thus, companies looking to sell their business shouldn’t be surprised if they receive lower valuations than what their peers reported getting last year.

Holland will participate in a session called “Channel M&A: Everything Today’s Leaders Need to Know,” alongside Total IT Technology Solutions’ Steve Dunmall and August Equity’s Mehul Patel. The session will happen at Channel Partners Europe, 14-15 June, in London.

In this preview, Holland shares insights with Channel Futures about trends impacting consolidation and private equity in Europe.

Channel Futures: How would you summarize the state of channel M&A in Europe? What trends are you seeing among both vendors and partners?

CFA's John Holland

CFA’s John Holland

John Holland: The volume and aggregate value of M&A transactions in Europe in 2021 were extraordinary. According to Pitchbook, the trend continued into [the first quarter of] 2022 with record volume and aggregate value. The robust demand for technology businesses with recurring revenues has elevated valuations to lofty levels as certain sectors have undergone rapid consolidation. However, there are dark clouds on the horizon.

Join 500+ MSPs, resellers and vendors at Channel Partners Europe, 14-15 June, in London. Part of London Tech Week, the event will feature 50+ channel leaders, innovators and experts. We’re expecting 1,500 attendees with whom you can discuss channel best practices and next-gen technology. Register now!

CF: Private equity is one of the most notable forces engaging in channel consolidation right now. What’s one important thing prospective sellers should know about these private equity firms?

JH: Debt is the fuel that propels acquisitions. The low interest rates of the past decade have driven a record volume of mergers and acquisitions. Private equity firms utilize leverage to acquire businesses. Leverage boosts the return on investment in ordinary macroeconomic scenarios. However, as the global economy faces extraordinarily high inflation, interest rates are rising dramatically worldwide, thereby elevating the cost of capital for private equity firms. Meanwhile, the risk of recession seems to be rising as higher fuel costs dampen economic activity. In this macroeconomic environment with higher risk of recession and higher interest rates, private equity firms are likely to adopt financial models with lower valuations. Business owners who are contemplating selling their businesses need to understand that the high multiples on EBITDA (earnings before interest, taxes, depreciation, and amortization) of the past will likely decline.

The public equities market for technology shares might be a harbinger for valuations of privately held technology services firms. Even hot cybersecurity and cloud technology companies like Crowdstrike, Zscaler, and Microsoft have depressed share prices now. In the European IT services area, major players like SoftwareOne, Computacenter and Softcat are way below their 52-week highs.

CF: What’s one key question a prospective seller should ask a prospective buyer, and vice versa?

JH: Sellers of businesses spend an enormous amount of time providing prospective acquirers with financial documents and other confidential details about the sellers’ businesses. Before providing any prospective acquirer with any information, a confidentiality agreement should be executed. Prospective sellers of businesses should ask prospective acquirers to demonstrate the financial capacity necessary for the acquisition. Also, it is important for the seller of a business to understand the goals of the acquirer, the potential synergy with the acquirer, the acquirer’s expectation for the role (if any) of the seller in the acquired business, and the acquirer’s plan (if any) to integrate the seller’s business into a larger entity. Sometimes acquisitions involve the seller rolling over equity into the acquirer’s business. Rolling over equity requires extensive due diligence on the acquirer’s business – just like in any other investment.

CF: Is there anything else you’d like to add?

JH: The best way for a business owner to maximize the value of his/her business on the sale of the business is to have an investment banker orchestrate a confidential auction-like process that pits prospective acquirers against each other. Negotiations between a business owner and a private equity firm are asymmetrical. That’s because private equity firms have teams of legal and financial advisers with years of experience in mergers and acquisitions. Sellers of businesses should level the field by seeking legal and financial guidance from experts.

Jun 02

‘Dark Clouds on the Horizon’ as European Channel M&A Continues

By | Managed Services News

The channel is consolidating at a fast rate, but the M&A landscape could soon change dramatically.

Economic trends in Europe indicate that private equity firms will likely offer lower multiples to prospective sellers.

So says John Holland, managing director of Corporate Finance Associates. Holland, whose investment banking firm advises midmarket businesses on M&A, said macroeconomic factors are depressing share prices even amongst the hottest technology companies. Thus, companies looking to sell their business shouldn’t be surprised if they receive lower valuations than what their peers reported getting last year.

Holland will participate in a session called “Channel M&A: Everything Today’s Leaders Need to Know,” alongside Total IT Technology Solutions’ Steve Dunmall and August Equity’s Mehul Patel. The session will happen at Channel Partners Europe, 14-15 June, in London.

In this preview, Holland shares insights with Channel Futures about trends impacting consolidation and private equity in Europe.

Channel Futures: How would you summarize the state of channel M&A in Europe? What trends are you seeing among both vendors and partners?

CFA's John Holland

CFA’s John Holland

John Holland: The volume and aggregate value of M&A transactions in Europe in 2021 were extraordinary. According to Pitchbook, the trend continued into [the first quarter of] 2022 with record volume and aggregate value. The robust demand for technology businesses with recurring revenues has elevated valuations to lofty levels as certain sectors have undergone rapid consolidation. However, there are dark clouds on the horizon.

Join 500+ MSPs, resellers and vendors at Channel Partners Europe, 14-15 June, in London. Part of London Tech Week, the event will feature 50+ channel leaders, innovators and experts. We’re expecting 1,500 attendees with whom you can discuss channel best practices and next-gen technology. Register now!

CF: Private equity is one of the most notable forces engaging in channel consolidation right now. What’s one important thing prospective sellers should know about these private equity firms?

JH: Debt is the fuel that propels acquisitions. The low interest rates of the past decade have driven a record volume of mergers and acquisitions. Private equity firms utilize leverage to acquire businesses. Leverage boosts the return on investment in ordinary macroeconomic scenarios. However, as the global economy faces extraordinarily high inflation, interest rates are rising dramatically worldwide, thereby elevating the cost of capital for private equity firms. Meanwhile, the risk of recession seems to be rising as higher fuel costs dampen economic activity. In this macroeconomic environment with higher risk of recession and higher interest rates, private equity firms are likely to adopt financial models with lower valuations. Business owners who are contemplating selling their businesses need to understand that the high multiples on EBITDA (earnings before interest, taxes, depreciation, and amortization) of the past will likely decline.

The public equities market for technology shares might be a harbinger for valuations of privately held technology services firms. Even hot cybersecurity and cloud technology companies like Crowdstrike, Zscaler, and Microsoft have depressed share prices now. In the European IT services area, major players like SoftwareOne, Computacenter and Softcat are way below their 52-week highs.

CF: What’s one key question a prospective seller should ask a prospective buyer, and vice versa?

JH: Sellers of businesses spend an enormous amount of time providing prospective acquirers with financial documents and other confidential details about the sellers’ businesses. Before providing any prospective acquirer with any information, a confidentiality agreement should be executed. Prospective sellers of businesses should ask prospective acquirers to demonstrate the financial capacity necessary for the acquisition. Also, it is important for the seller of a business to understand the goals of the acquirer, the potential synergy with the acquirer, the acquirer’s expectation for the role (if any) of the seller in the acquired business, and the acquirer’s plan (if any) to integrate the seller’s business into a larger entity. Sometimes acquisitions involve the seller rolling over equity into the acquirer’s business. Rolling over equity requires extensive due diligence on the acquirer’s business – just like in any other investment.

CF: Is there anything else you’d like to add?

JH: The best way for a business owner to maximize the value of his/her business on the sale of the business is to have an investment banker orchestrate a confidential auction-like process that pits prospective acquirers against each other. Negotiations between a business owner and a private equity firm are asymmetrical. That’s because private equity firms have teams of legal and financial advisers with years of experience in mergers and acquisitions. Sellers of businesses should level the field by seeking legal and financial guidance from experts.

Jun 02

‘Dark Clouds on the Horizon’ as European Channel M&A Continues

By | Managed Services News

The channel is consolidating at a fast rate, but the M&A landscape could soon change dramatically.

Economic trends in Europe indicate that private equity firms will likely offer lower multiples to prospective sellers.

So says John Holland, managing director of Corporate Finance Associates. Holland, whose investment banking firm advises midmarket businesses on M&A, said macroeconomic factors are depressing share prices even amongst the hottest technology companies. Thus, companies looking to sell their business shouldn’t be surprised if they receive lower valuations than what their peers reported getting last year.

Holland will participate in a session called “Channel M&A: Everything Today’s Leaders Need to Know,” alongside Total IT Technology Solutions’ Steve Dunmall and August Equity’s Mehul Patel. The session will happen at Channel Partners Europe, 14-15 June, in London.

In this preview, Holland shares insights with Channel Futures about trends impacting consolidation and private equity in Europe.

Channel Futures: How would you summarize the state of channel M&A in Europe? What trends are you seeing among both vendors and partners?

CFA's John Holland

CFA’s John Holland

John Holland: The volume and aggregate value of M&A transactions in Europe in 2021 were extraordinary. According to Pitchbook, the trend continued into [the first quarter of] 2022 with record volume and aggregate value. The robust demand for technology businesses with recurring revenues has elevated valuations to lofty levels as certain sectors have undergone rapid consolidation. However, there are dark clouds on the horizon.

Join 500+ MSPs, resellers and vendors at Channel Partners Europe, 14-15 June, in London. Part of London Tech Week, the event will feature 50+ channel leaders, innovators and experts. We’re expecting 1,500 attendees with whom you can discuss channel best practices and next-gen technology. Register now!

CF: Private equity is one of the most notable forces engaging in channel consolidation right now. What’s one important thing prospective sellers should know about these private equity firms?

JH: Debt is the fuel that propels acquisitions. The low interest rates of the past decade have driven a record volume of mergers and acquisitions. Private equity firms utilize leverage to acquire businesses. Leverage boosts the return on investment in ordinary macroeconomic scenarios. However, as the global economy faces extraordinarily high inflation, interest rates are rising dramatically worldwide, thereby elevating the cost of capital for private equity firms. Meanwhile, the risk of recession seems to be rising as higher fuel costs dampen economic activity. In this macroeconomic environment with higher risk of recession and higher interest rates, private equity firms are likely to adopt financial models with lower valuations. Business owners who are contemplating selling their businesses need to understand that the high multiples on EBITDA (earnings before interest, taxes, depreciation, and amortization) of the past will likely decline.

The public equities market for technology shares might be a harbinger for valuations of privately held technology services firms. Even hot cybersecurity and cloud technology companies like Crowdstrike, Zscaler, and Microsoft have depressed share prices now. In the European IT services area, major players like SoftwareOne, Computacenter and Softcat are way below their 52-week highs.

CF: What’s one key question a prospective seller should ask a prospective buyer, and vice versa?

JH: Sellers of businesses spend an enormous amount of time providing prospective acquirers with financial documents and other confidential details about the sellers’ businesses. Before providing any prospective acquirer with any information, a confidentiality agreement should be executed. Prospective sellers of businesses should ask prospective acquirers to demonstrate the financial capacity necessary for the acquisition. Also, it is important for the seller of a business to understand the goals of the acquirer, the potential synergy with the acquirer, the acquirer’s expectation for the role (if any) of the seller in the acquired business, and the acquirer’s plan (if any) to integrate the seller’s business into a larger entity. Sometimes acquisitions involve the seller rolling over equity into the acquirer’s business. Rolling over equity requires extensive due diligence on the acquirer’s business – just like in any other investment.

CF: Is there anything else you’d like to add?

JH: The best way for a business owner to maximize the value of his/her business on the sale of the business is to have an investment banker orchestrate a confidential auction-like process that pits prospective acquirers against each other. Negotiations between a business owner and a private equity firm are asymmetrical. That’s because private equity firms have teams of legal and financial advisers with years of experience in mergers and acquisitions. Sellers of businesses should level the field by seeking legal and financial guidance from experts.

Jun 02

VMware Takes On Lateral Security with Contexa Threat Detection

By | Managed Services News

VMware will offer broad threat detection with telemetry from its various solutions.

VMware has added threat detection capability called VMware Contexa that discovers lateral network traffic. The new technology, released on Thursday, is a cloud-based service that VMware is adding across its various offerings.

The launch of Contexa comes in advance of next week’s RSA Conference in San Francisco, where VMware will demonstrate it. It also comes a week after Broadcom agreed to acquire VMware for $61 billion. VMware had planned the Contexa launch before the announcement of the deal.

Detecting lateral network movement is important because it has become a prevalent threat. Lateral movement typically indicates an undiscovered attack that often has occurred months or in some cases, years earlier.

VMware claims that Contexa is more likely to discover lateral network traffic than current security information and event management (SIEM) and extended detection and response (XDR) solutions. That’s because SIEM and XDR offerings rely on sampled telemetry, said Tom Gillis, senior VP and general manager of VMware’s Advanced Security Business Group.

VMware's Tom Gillis

VMware’s Tom Gillis

“It’s a hint or an indicator of what’s happening, but it doesn’t give you the visibility,” Gillis said of SIEM and XDR offerings. “It’s not because the analytics of SIEM [or XDR] are bad; it’s because [they] doesn’t have access to the raw data to be able to understand what’s happening.”

VMware Contexa is not a product; rather, it is analytics technology that monitors traditional virtual environments through VMware NSX and endpoints via VMware Workspace One and Carbon Black. For modern, cloud-native app environments, Contexa detects threats via VMware Tanzu. VMware is offering it at no additional cost.

Advances in silicon from AMD and Intel have resulted in 128 core servers, making it possible to run more than 100 VMs on physical host, Gillis emphasized. Little of that traffic is actually analyzed, Gillis noted.

“By instrumenting the virtualization layer, we see every packet and every process,” he said. “And we understand them in context.”

Billions of Threats Detected

Contexa currently processes more than 1.5 trillion endpoint events and 20 billion network flows daily, according to a VMware internal analysis performed last month. Contexa detects roughly 2.2 billion suspicious activities each day, according to the analysis. VMware combines the machine learning data with information from 500 human researchers across the VMware Threat Analysis Unit and among different incident response partners. Among those events, VMware said it provides automated responses to more than 80% of them.

Omdia's Eric Parizo

Omdia’s Eric Parizo

“By combining threat insights from NSX, Carbon Black and Workspace One, and supplementing those capabilities with machine learning and human expertise, VMware has an opportunity to excel as a provider of threat intelligence and threat detection, investigation and response across the entire modern enterprise,” said Eric Parizo, lead analyst for Omdia’s Cybersecurity Operations (SecOps) Intelligence Service. (Informa is the parent company of both Omdia and Channel Futures.)

Workspace One and MACS

VMware Contexa is available now for VMware’s Workspace One client virtualization offering and its Modern Apps Connectivity Services (MACS).  MACS is an offering consisting of the VMware NSX Advanced Load Balancer and VMware Tanzu Service Mesh. VMware’s NSX Advanced Load Balancer provides consolidated, multicloud, north-south application services.

Tanzu Service Mesh automates the execution of distribution of apps with secure east-west connectivity across Kubernetes clusters and connects to traditional virtual machine environments. It provides traffic management, policy control, encryption and authorization services to distributed apps. VMware plans to add Contexa to other offerings over time, including its Carbon Black endpoint protection offering.

“With Contexa, VMware is doing what’s rare in enterprise cybersecurity, namely offering a solution that’s truly innovative, by way of the depth and integration of its security telemetry across endpoints, applications, within virtual and hybrid data centers, at access points, and across distributed cloud edge environments,” Parizo said.

“Where I think VMware has a particularly compelling opportunity to excel is in its ability to use its unique position within the application infrastructure to observe and understand application-layer traffic, in both traditional virtual applications and cloud-native containerized and microservices-based applications, and pinpoint anomalous activity,” he added. “Even today this remains a remarkably challenging endeavor that few vendors can do consistently and effectively.”

 

Jun 02

HPE Conducting ‘Orderly Exit’ from Operations in Russia

By | Managed Services News

We’ve also got more news from AWS, Salesforce, Gartner on the public cloud market, and MSP SADA.

There’s a lot of activity in the cloud computing world this week. Have you heard the latest from Hewlett Packard Enterprise (HPE) regarding its operations in Russia? We have that in the slideshow above. Also, we dive a little deeper into Amazon Web Services’ strategy for smaller channel partners working in the public sector. We spoke with the company’s public sector head, who shared more about how AWS is enabling smaller managed service providers and resellers (who often feel overlooked by the world’s largest public cloud provider).

Then there’s Salesforce and its stellar earnings. The company’s channel partners are surely doing the happy dance. Finally, we have the latest from Gartner on global cloud vendor rankings and IaaS adoption, and a ditty from SADA about its own growth.

See our slideshow above for all the insight, starting with HPE’s new approach to operations in Russia.

 

>