All Covered M&A Database Focuses Vertical, Global MSP Push

All Covered M&A Database Focuses Vertical, Global MSP Push

All Covered, the fast-growing managed IT service provider, has built an MSP and IT service provider database to help identify, track and target the world's best MSPs for potential acquisition. This is not an industry consolidation strategy. Nor is it a roll-up strategy, asserts CEO Todd Croteau. Instead, All Covered (backed by parent Konica Minolta), is trying to build the world's most successful IT service provider with an emphasis on three vertical markets: Health care, education and legal. Here's the inside story.

Konica Minolta acquired All Covered in January 2011. At the time, I wondered if All Covered's own M&A strategy would slow down or stall. It hasn't. All Covered has acquired roughly 10 MSPs and IT service providers since that time. The latest purchase, announced yesterday, involved CompuQuip's managed IT services business in Miami.

And don't blink an eye: I have an extremely strong hunch that All Covered's next M&A target could be a few heartbeats away from happening...

Targets for Profitable Growth

How is All Covered finding MSPs to target for acquisition? Croteau offered some answers to MSPmentor this evening during a phone briefing. Croteau mentioned that All Covered's ambitions are not limited to North America. The company has acquired two IT service providers in Europe -- one in Sweden, the other in France --  and more deals could be coming.

Will All Covered go broke buying up MSPs? Apparently not. Croteau says the company remains profitable and synergies with parent Konica Minolta are kicking into high gear. He estimates that 50 percent to 75 percent of All Covered's managed IT customers will become Konica Minolta customers as well within the next two years. The up-sell and cross-sell opportunities are real, he added.

"We are not just out to grab market share and get larger on the horizontal side," Croteau said. "We know it will be key to differentiate beyond the horizontal market, at the application layer and where you provide vertical value." That's why All Covered has been emphasizing the education, health care and legal verticals in recent M&A discussions.

The Team, The Database

Although Croteau is the public face and voice of All Covered, MSPs on the M&A trail need to know Bruce Teichman, the company's director of corporate. TruMethods CEO Gary Pica interviewed Teichman during the recent Schnizzfest 2012 conference in July.

One thing the conversation didn't cover: An All Covered database, built in, that tracks at least 800 MSPs and IT service providers.

Yes, All Covered has had discussions with over 800 MSPs the past few years. But so far, only about a dozen deals have materialized since early 2011. All Covered rejects the vast majority of target companies because they typically lack the right profit mix, intellectual property, market focus or something else.

In stark contrast, All Covered's latest target -- Compuquip's managed IT business -- made the grade. During today's call, I also gained some deeper perspectives from Compuquip's Eric Dosal. More on that a bit later tonight or tomorrow...
TAGS: Financing
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