Best Buy's acquisition of mindSHIFT is now complete, and mindSHIFT is now "officially a 100% owned subsidiary of Best Buy," according to mindSHIFT CEO Paul Chisholm. So should customers -- and rival managed services providers -- expect big changes over at mindSHIFT? The simple answer is no. I believe mindSHIFT has a clear long-term plan for cloud services and managed services, while Best Buy has its hands full trying to bolster its traditional retail business. Here's the background.
"The company [mindSHIFT] will continue to be run by the same management team and there are no changes to our operation," Chisholm wrote in an email reply to MSPmentor today. "We have obviously done some preliminary meetings on integration but most of the focus has been to educate both organizations on the capabilities of the other."
Changing the Managed Services Game?Best Buy announced the mindSHIFT buyout in November 2011. The $167 million deal, which I believe valued mindSHIFT at about 10X to 12X EBITDA, turned numerous heads in the managed services market. mindSHIFT itself has acquired multiple MSPs in recent years, and mindSHIFT has been ranked at or near the top of our annual MSPmentor 100 report multiple times.
Some observers wonder if Best Buy will connect the dots between its Geek Squad service and mindSHIFT's managed services and cloud services. But Chisholm has previously indicated that mindSHIFT doesn't expect to make wholesale changes under Best Buy's ownership. According to a prepared Best Buy statement from November 2011:
"Like Best Buy’s purchase of Geek Squad in 2002, the goal of the acquisition is to support and leverage the proven mindSHIFT business model while giving its management the freedom and resources to grow. mindSHIFT will continue to operate under its current name, management team and capabilities, which currently include 500 employees..."
Best Buy Faces ChallengesMeanwhile, Best Buy has its hands full running its existing retail stores. Shares in the big box retailer (BBY) are trading near a 52-week low. Some skeptics, such as Forbes contributor Larry Downes, assert that Best Buy is "gradually" going out of business amid fierce competition from online retailers (Amazon); specialty brick-and-mortar destinations (Apple Stores); and discount chains and member-driven retailers (Wal-Mart and Costco). In its most recent quarterly report, disclosed in mid-December 2011, Best Buy said net income fell by 29 percent.
I don't necessarily agree with Downes' assertion that Best Buy faces long-term doom. But my own spending habits have certainly changed in the past five years. I used to wait on Black Friday lines to buy the latest digital devices from Best Buy. But the rush to buy flat screen TVs, netbooks and PCs from big box retailers now seems to be over -- and Best Buy needs to find the Next Big Consumer Device to get shoppers back into its stores.
Steady LeadershipStill, mindSHIFT joins a massive parent. And potential synergies between Best Buy's small business sales and mindSHIFT's IT services could be abundant. mindSHIFT CEO Paul Chisholm provides a steady, focused leadership style that doesn't get caught up in industry hype -- a welcome approach for customers and employees.
But as I've stated before, I think small MSPs need not worry too much about the Best Buy-mindSHIFT combo -- for these reasons.