Managed Services Merger Targets Financial Services Vertical

Managed Services Merger Targets Financial Services Vertical

HEIT and Simpler-Webb have confirmed plans to merge, apparently forming the largest U.S. managed services provider focused on the financial services vertical market -- serving more than 450 banks and credit unions. Here's a closer look at the deal, and potential takeaways for peer MSPs that want to blend cloud services with vertical market expertise.

HEIT, based in Fort Collins, Colo., is a well-known MSP focused on the banking industry. Dan Holt, CEO of HEIT, recently landed on our third-annual MSPmentor 250 list, and HEIT has been a frequent member of the annual MSPmentor 100 report, which tracks the world's top managed services providers. Similarly, Simpler-Webb of Austin, Texas, has a strong focus on the financial services vertical. Terms of the deal were not disclosed. The merger comes as HEIT prepares to host a financial services summit in October 2010.

According to a prepared statement:

"Combined, the new company is a national provider of technology management to more than 450 community banks and credit unions, and offers a comprehensive portfolio of managed technology and strategic solutions. The company will operate under the HEIT brand."
As part of the announcement, HEIT is blending messaging around cloud computing and managed services. According to the company:
"Cloud-based managed services enable community financial institutions to access on-demand technology and services without the requirement to purchase, build and integrate redundant data centers, servers, applications and networks. HEIT’s flexible managed services architecture delivers a host of technology management, security and compliance services to its community bank and credit union clients."
Holt will lead the combined company. Jeff Simpler, co-founder of Simpler-Webb, joins HEIT as the company's chief business development officer. Also, HEIT announced the appointment of Tom Shen to its board of directors. Shen is a veteran financial services technology executive and has worked with community financial institutions for more than 30 years, HEIT says.

Vertical Market M&A?

The HEIT/Simpler-Webb combo suggests that vertical market MSP consolidation could be ready to start. In recent months, a range of vertical market MSPs have indicated interest in M&A activity, but most say they only want to pursue deals that reinforce their vertical market focus.

A prime example: Mike Jones, CEO of ETG -- a health care MSP -- in June 2010 told MSPmentor he was surprised that a lot of potential buyers really don't understand his business. At the time, Jones said he was only willing to speak with potential suitors that go really deep in health care IT.

It sounds like HEIT/Simpler-Webb have a similar mindset in the financial services vertical. Fingers crossed, I expect to speak with HEIT and Simpler-Web executives later today to offer MSPmentor readers deeper insights on the deal.

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