Channel Dive (Informa) has been writing about the only public TSB, Scansource/Intelisys. The hardware distributor side of the business can’t understand why the TA side of the business (Intelisys) won’t sell hardware. TA’s don’t bill, collect payments, deal with sales taxes. Get it, Mike Bauer?
Besides Intelisys in 2016, Scansource has made 3 acquisitions in this division: Resourcive [a TA], Advantix [managed connectivity], and DataXoom [wireless MVNO]. Anything for recurring revenue now
“Since receiving growth funding from Charlesbank Capital Partners in late 2021, Bridgepointe has invested over $200M in 47 strategic partnerships through its Equity Partner Program, fueling growth, innovation, and long-term value.” This TSB is more of a super-agency like Upstack than a TSB like Telarus.
Avant has made acquisitions as well. Except for grabbing PlanetOne, most M&A has been boutique to grab a specialist. It is hard to find acquisitions that can match the culture there. Drink that Kool-aid or else!
Upstack is still buying agencies, but as the Agents hit tenure, the few I know became W2’s. Can’t say enough how much you need an attorney when selling your business! Upstack does not act like a TSB nor are they set up functionally to be a TSB.
Bluewave is also buying agencies in its pursuit of being a super-agency. Their money ($75M) comes from Columbia Capital, which also owns Telarus. Still waiting for that merger to happen. Telarus is five years into their investment. VCs usually hold for 5-7 years. PE (private equity) is usually shorter (up to 5 years). In both cases, when the limited partnership fund is closed, all investments must be closed out.
BTW, even Crunchbase uses the term Technology Solutions Brokerage (TSB) not Distributor (TSD), because the former master agencies do not distribute anything except commission checks.
Sandler is still private and still moving along as a growing TSB.
Telarus befuddles me because the management is always spinning a story about how they are like Accenture. That analogy is one Bridgepointe is using but the majority of TAs do not bill consulting hours. And Accenture has 110K employees billing hours as the firm tries to not implode during the AI push. The Big Consulting groups are now pivoting to an outcomes based billing approach at least when it comes to AI projects.
There are thousands of cybersec vendors (about 4000 is the number I just saw). There are 2800+ Agentic Ai companies. There are 2000+ providers in the US offering UCaaS or Hosted PBX. They all want partners selling their sh!t. They all are looking for the golden TSB to deliver that gold.
ACS just made a splash by landing Sparklight, the cableco formerly known as Cable One. Why? Partners sell a lot of network. In fact, network (broadband and internet access) plus voice make up 80+% of transactions through the TSBs.
AppDirect is the one that makes the most noise. And it is just noise. I can’t figure out the plan. My buddy Greg says it is world domination. That makes as much sense as anything.
AppSmart acquired master agencies CNSG, Microcorp, Acuity, TBI, WCG, and Telegration. There may have been more. AppDirect killed the AppSmart brand. They also killed the TSB. The focus is on the B2B marketplace, cloud apps and enterprise. AppDirect has made many other acquisitions, let’s see if they make sense to you.
AppD buys Tackle.io this month to get access to hyperscalers and give sales assist to partners as they try to enter the hyperscaler sales world. “Tackle.io provides an end-to-end platform that enables software vendors to identify potential buyers, collaborate with cloud partners, and transact through cloud marketplaces. The platform offers three core capabilities. First, it helps companies identify cloud buyers through their Tackle Prospect tool, which provides data on who is purchasing through each cloud provider to accelerate sales opportunities. Second, it enables companies to co-sell with cloud partners by automating the cloud co-sell process and maximizing relationships with AWS, Azure, and Google Cloud. Third, it allows companies to list and transact on cloud marketplaces, optimizing marketplace operations and integrating seamlessly with Salesforce to provide unified visibility into marketplace data, co-sell activities, and cloud buyer intent.” Tackle.io has processed over $10 billion in marketplace transactions and forecasts that cloud marketplace throughput will reach $100 billion by 2026. It was valued at $1B when AppD acquired it.
That fits with the acquisition in May 2024 of BuiltFirst, which is now called AppDirect’s reseller store, since Builtfirst is a B2B marketplace platform that allows companies to launch white-label, cloud-based partner hubs. Oh and it is low-code just so we stuff in all the keywords.
Last month, AppD bought one of its invested partners, NXTSYS, an MSP-Focused regional TSB. That is likely a route to get more MSPs into the AppD sphere of influence.
They also bought an AI company [Devs.ai agentic AI platform], which seems to be just an CLEC of AI. In other words, it just seems to resell ChatGPT and the other branded LLMs.
Last December, AppD bought Firstbase, an IT Asset management platform, that allows partners to Procure, deploy, manage, and retrieve team equipment anywhere through a single all-in-one lifecycle management platform. An enterprise tool. They acquire a lot of Enterprise tools despite the fact that more than 85% of all partner transactions are with SMB (under 500 employees).
This week AppD also grabbed vCom. “B2B commerce platform AppDirect has acquired vCom, an IT lifecycle management provider for midsize companies. The closure of the $100 million deal, announced Wednesday (Dec. 10), will see vCom’s offerings embedded with AppDirect’s recently launched unified lifecycle management platform. “Integrating vCom’s lifecycle management platform, Buyers’ Club network, and mobile solutions into the AppDirect procurement suite will expand our customers’ ability to manage the end-to-end lifecycle of all of their technology in one single platform,” AppDirect CEO and Chairman Nicolas Desmarais said. [pymnts]
They acquired two Energy brokerage businesses – Brokeronlinexchange.com and DNE Resources, which fits in with the old AppSmart TSB business.
In 2023, AppDirect acquired ADCom’s network operations center, monitoring platform to launch managed services suite. It spun this out to look like a TA business, which fits with what they are doing with NXTSYS.
Maybe Nicolas should be on ADHD meds. I wonder how he explains this to his investors.
Ingram and TD Synnex are like Scansource. They are hardware and software licensing distributors with a cloud brokerage and some telecom brokerage.
Avant, Sandler and Telarus are similar in that they are largely a pure play TSB.
Bluewave and Upstack are the same.
Bridgepointe is a hybrid of Bluewave/Upstack and a TSB.
AppDirect is its own weirdo. AppSmart was started with the WCG merger in 2019.
Most of the $1 Billion plus of investment in the TSB space is now going on 4 years old. Upstack got their Berkshire money in 2021. Avant got its $100M from Pamlico in 2021. Telarus got its cash from Columbia Capital in December of 2020. I know I have said that a transaction should have happened already and it hasn’t but I am still mind boggled by why investors find this space attractive.
HNA acquired Ingram Micro for $6B in 2016. Big money. HNA had troubles. Platinum Equity grabbed Ingram for $7.2B in 2020. The IPO was well-received initially. Ingram Micro priced its offering in 2024 at $22 per share (middle of the $20-$23 range) and was over-subscribed. The stock closed its first day of trading at $24.60, representing a strong 11.8% first-day gain. The offering raised $409 million and gave the company a market valuation of $5.8 billion. The stock is up 6%!
For institutional investors and Platinum Equity (which remains the largest shareholder), the IPO successfully returned the company to public markets and raised capital to pay down debt. However, for retail investors hoping for strong IPO returns, Ingram Micro has been a disappointment, delivering below-market returns in what has been a strong bull market period.
So if they could slap together Avant and Telarus, like they did SYNNEX and Tech Data in 2021, they could IPO that company in 2027. If Ingram [NYSE:INGM], Scansource [NASDAQ: SCSC] and TD Synnex [NYSE: SNX] can sustain the stocks and the market doesn’t crash.
But PE didn’t really get a full exit from ingram with that IPO, but maybe enough of one. How will the investors get a return out of the Bridgepointe ($200M), Avant ($100M), Bluewave ($75M), Upstack ($50M + $100M), Telarus ($100M my guess) and AppDirect has taken in $575M that we know of but it is likely they took in another $1B in investment or debt or both this month. But I am not including AppD in the invested amount since they are not in play. Intelisys and Sandler Partners aren’t in play either. That is $625M in investment since 2020.
If Intelisys is any indication the TA space is growing at 4%. [ Intelisys & Advisory net sales for the first quarter increased 4.0% year-over-year to $24.2 million reflecting the addition of an acquisition.] That isn’t enough for ROI. Even if other TSBs are growing twice as fast that is 8%.
One problem is that partners that sold out 3+ years ago have retired or moved on from the TSB. It would have been wise to have an M&A transaction at the peak, not on the other side of a peak.
I don’t think the partner space is growing like some talking heads suggest. Inter-connects are certainly not growing. VAR is not a preferred business model since the biggest vendors are pushing hardware as a service not hardware. The MSP is growing but it also has a lot of M&A and confusion. AI and cybersec are advanced skills that most of the 62K North American MSPs do not have. I know why everyone bets on the MSP model, but I don’t think most of the people who bet on it so heavily really understand the demographics. There are 1000 MSPs that sell to mid-market and above. The rest sell to SMB.
Lots of speculation. We will just have to wait and see.
