Category Archives for "Managed Services News"

Jun 02

Windstream Enterprise Selects Lumen, Verizon Vet as New CRO

By | Managed Services News

He has 20 years of experience in telecommunications sales, technology and operational innovation.

Michael Fiacco is the new chief revenue officer for Windstream Enterprise. Fiacco previously was senior vice president for the East and financial services vertical at Lumen Technologies. He will further enhance Windstream’s commitment to technological innovation and superior customer service, the company said.

Windstream's Buddy Bayer

Windstream’s Buddy Bayer

Buddy Bayer is president of the Windstream Enterprise and Wholesale organization.

“Our customers’ needs are evolving as the market accelerates its digital transformation, and Windstream Enterprise and Wholesale is evolving alongside them to ensure that we are delivering the leading-edge products and services they need to succeed,” Bayer said.

Fiacco will oversee all sales and marketing functions for Windstream Enterprise. He will focus on converting customers to next-generation products such as its SD-WAN, OfficeSuite UC and managed SASE solutions.

Prior Experience

“There is a high level of excitement within Windstream about our progress and new organizational structure that will enable the Enterprise and Wholesale team to solidify its past successes while continuing to drive innovation that will position it for long-term success,” Bayer said. “We are thrilled to welcome Mike to Windstream Enterprise. I look forward to his contributions to Windstream and the customers we serve.”

Fiacco has more than 20 years of successful and impactful experience in telecommunications sales, technology and operational innovation, Bayer said. For CenturyLink (now Lumen), he held vice presidential roles for the East, Northeast and Southeast regions. Prior to CenturyLink, Fiacco spent five years at Verizon as a regional sales manager.

Windstream's Michael Fiacco

Windstream’s Michael Fiacco

“I’m excited to join the Windstream Enterprise team,” Fiacco said. “The communications ecosystem is undergoing a profound change, and Windstream Enterprise has the expertise and next-generation product portfolio to help our customers manage the transition. Going forward, we’re going to be even more innovative and aggressive and continue to differentiate ourselves in the marketplace.”

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

Devo Technology Gets $100 Million to Promote ‘Autonomous’ SOC, Global Expansion

By | Managed Services News

The company has now raised more than $500 million in total capital.

Devo Technology has received $100 million in a funding round, boosting its valuation to $2 billion. The cloud-native logging and security analytics company has now raised a total of more than $500 million.

Global investment firm Eurazeo led the latest funding round. Insight Partners, Georgian, TCV, General Atlantic, Bessemer Venture Partners, Kibo Ventures also participated. Additionally, ISAI Cap Venture provided a strategic investment.

The funding comes on the heels of Devo’s acquisition of Kognos, the AI-powered threat hunting pioneer. This marked a key step in delivering what Devo calls the autonomous SOC — complete visibility, automation, analytics, and open access to community expertise and content. The autonomous SOC will integrate seamlessly with security and IT tools, the company said. It will enable SOC leaders to leverage automation such as AI and machine learning. Teams will perform fast, effective incident response and detection to resolve threats on large-scale, cloud and legacy infrastructures.

Facing Threats Head-On

Devo's Marc van Zadelhoff

Devo’s Marc van Zadelhoff

Marc van Zadelhoff is CEO of Devo.

“This round of funding allows us to deliver on the autonomous SOC through continued innovation of our technology, expand to more regions to serve more customers, and consider more M&A opportunities,” van Zadelhoff said. “We’re thrilled to have instilled such confidence in our investors that they continue to support our innovation and the value we deliver to customers.”

He said security teams are facing more threats than ever. This is compounded by the difficulty of hiring and retaining talent. In addition, there’s a lack of visibility into the full attack surface and the speed and scale necessary to keep up with growing threats. The growth of organizations behind these threats is also a concern.

Regional Expansion

Devo plans to double down on its commitment to recent expansions in Europe and Asia Pacific. It has also seen substantial growth in Asia, including adding energy provider Powerco and deploying an in-region AWS environment for customers and partners. In February, Devo announced it was designated as Federal Risk and Authorization Management Program’s (FedRAMP) “In-Process” and expects to reach full authorization in the fall of 2022.

Eurazeo's Guillaume d'Audiffret

Eurazeo’s Guillaume d’Audiffret

Guillaume d’Audiffret is managing director at Eurazeo and joins the Devo Board.

“Devo has proven to be a disruptive force in the security analytics market, and we believe in its vision to fundamentally change the way organizations secure their data,” said d’Audiffret. “It is setting a pace for innovation that will enable its customers to meet the ever-growing challenges facing security teams and we look forward to continuing our work together with Devo and fellow investors to further develop its market leadership.”

Devo just last year debuted Devo Drive, its first partner program for resellers, MSSPs and global systems integrators. The program launched with three tiers for partners who want to sell Devo’s data logging and SIEM solutions.

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

Lumen, Upstack Sign Deal: What Does This Mean for the TSBs?

By | Managed Services News

The deal marks Upstack’s largest direct supplier agreement yet.

Upstack has signed a partnership with Lumen Technologies in a landmark move for the private equity-backed channel partner and the rest of the technology advisory channel.

The deal, announced Thursday, marks the largest direct agreement Upstack has signed with a supplier. The sales partners operating under the Upstack umbrella can leverage Upstack’s contract to sell Lumen rather than working through the distributors and TSBs they have traditionally used for Lumen. The announcement also indicates that New York-based Upstack has built enough scale to justify a a contract with the behemoth carrier. Upstack has acquired more than 20 sales agencies using more than $150 million from Berkshire Partners, Midcap Financial and Morgan Stanley Private Credit.

Lumen's Dave Young

Lumen’s Dave Young

“Upstack is a shining example of a ‘next-generation partner’ capable of helping businesses adopt emerging technology solutions that will enable their digital transformations and beyond,” said Dave Young, senior vice president of strategic sales for Lumen. “We’re thrilled to be Upstack’s first major technology partnership providing business customers expert advice combined with access to Lumen’s advanced solutions portfolio.”

Lumen is moving a step closer to the customer with the deal by signing a direct contract. It will use Upstack’s platform for automated quoting and pricing, as well as Upstack’s roster of advisory partners and their customers.

Caruso, Nicholas_Upstack

Upstack’s Nick Caruso

“With its robust solution set and global network of emerging technologies for customers, Lumen has become a leading Upstack partner month after month,” said Nicholas Caruso, Senior vice President, global channels and alliances for Upstack. “We’re looking forward to working with Lumen to help our clients leverage more of the Lumen platform and its next-generation cloud and edge technologies.”

Background

Upstack, which Christopher Trapp founded in 2017, burst on the scene in 2021 with its $50 million Berkshire Partners investment. At the time, the deal marked the largest private equity investment in a direct-selling agent.

At the time, Trapp told Channel Futures that he and his team had debated building a technology solutions brokerage (TSB), formerly known as a master agent. But ultimately, he said Upstack preferred to focus on customer-facing sales.

“The [TSBs] are very talented at managing the relationships with suppliers,” Trapp said in 2021. “The agents are very talented at managing the relationships with the customers. We’re focused on that. It would be dilutive to our value proposition if we tried to be great at both of those today. So we’re going to continue leveraging those [TSBs] going forward,” he said.

Trapp also acknowledged at the time that Upstack would form certain direct partnerships with suppliers and leverage its own back office for those practices. And indeed, the firm has already done that. Cybersecurity provider Netacea announced in January that it had signed Upstack as a partner. In March Upstack announced an agreement with new data center provider Wyoming Hyperscale White Box.

For many of these smaller vendors, going direct with an agent makes the most sense economically.

“Look at what doing business with two or three TSBs costs,” said Jay Morris, chief aggregation officer for MOReCOMM Solutions. “If you want some decent exposure, you’re not even going to get out of the gate until you write a check for $100,000. 90% of the companies doing business in the channel don’t have those kinds of budgets to pay marketing dollars for for TSBs,” Morris said.

A Bellwether Partnership?

Lumen is an entirely new breed of supplier partner, however. The carrier, unlike Netacea and Wyoming Hyperscale White Box, has entrenched itself in the agent channel for decades and holds agreements with the national TSBs.

It’s also not the first major supplier on the network side that Upstack has approached. Rumors swirled in the spring that at least one other large networking supplier had spoken to Upstack about a direct contract.

“I believe this is the first of many direct agreements that we will see announced from Upstack,” Mejeticks CEO Rob DeVita told Channel Futures. “As they continue to grow and scale, it will be important that they lessen the need to rely on TSBs and increase their margin internally by removing that layer.”

Peter Radizeski, president of Rad-Info, predicts a similar trend of Upstack moving closer to the suppliers.

“Well, this is the second step in Upstack becoming a broker despite claims by the company to the contrary,” Radizeski told Channel Futures. “I will be interested to see how Lumen products and pricing find their way into a public-facing store and how that will affect the role partners play in the technology procurement process.

Lumen and the Channel

Dave Young assumed oversight of the Lumen channel partner program in 2021. He formerly worked in Lumen’s public sector and global hyperscale business. His new role as senior vice president of strategic sales put him in charge of channel, hyperscalers and systems integrators. In interviews with Channel Futures he has preached the need to create a more digital environment for partners and build synergies between Lumen’s different channels.

“All of those clients that we put together have something in common — working with another company to create value for a customer. That’s really easy to see in the partner channel. But when we begin to look at our relationship with the hyperscalers or the system integrators, you really begin to notice that’s a commonality in all of them. They’re also markets that we believe are the growth engine for what Lumen’s going to become in the next three to five years. And we’re putting them together so we can cross-pollinate ideas and solutions,” Young said in a Q&A last year.

Routes to Market

The agreement comes as the TSB space continues to consolidate. Avant last month announced the acquisition of PlanetOne, marking the transition of yet another independent firm into private equity. Many vendors and partners in conversations with Channel Futures have indicated that they expect the national TSBs to consolidate into 3-4 major players.

Radizeski has expressed skepticism about the end result that will come from the $600 million investments from private equity that have entered the TSB market in the last two years.

“We are just months away from a huge mess in the TSB space that it seems vendors are looking forward to,” he said.

In the meantime, many suppliers are diversifying their routes to market. For example, Comcast-owned Masergy recently turned to Ingram Micro to deliver a managed SD-WAN service through resellers. And Aryaka recently placed a click-to-buy SKU on the AppSmart marketplace, becoming the first network provider to join the marketplace.

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.

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