mindSHIFT Acquires Alpheon Amid MSP Buying Spree

mindSHIFT Acquires Alpheon Amid MSP Buying Spree

So much for a slowdown in the M&A market. The New Year has started with a flurry of managed services mergers and acquisitions. The latest deal involves mindSHIFT -- consistently ranked atop our MSPmentor 100 list -- buying Alpheon, another MSPmentor 100 company that focuses on health care. Here are the details, plus rumors about more M&A activity ahead.

According to the official statement:

mindSHIFT Technologies, the largest provider of IT and cloud services, today announced the acquisition of Alpheon Corporation, a Morrisville, North Carolina-based provider of managed IT services to small and mid-size organizations with a strong vertical presence in the healthcare market. Alpheon proactively monitors and manages customer networks to prevent issues before they arise. The acquisition enables mindSHIFT to better serve the unique needs of healthcare clients, increase its geographic reach and strengthen its position as the world’s largest provider of managed IT services.
Re-read that paragraph and you've got most of the details you need. mindSHIFT is repositioning a bit to emphasize its cloud services, and Alpheon hopes to gain economies of scale through the deal.

Alpheon's Perspective

During a call with Alpheon CEO Greg Donovan earlier today we covered the following points:
  • Why sell now?: "You've met [mindSHIFT CEO] Paul Chisholm so I don't have to say much else. If I had to pick a boss he'd be the one."
  • Why sell to mindSHIFT: "We saw this as a strategic opportunity to offer a better depth and breadth of services. It gives us the ability to offer things like virtualization as a service, virtual desktops and true cloud service offerings in health care."
  • When did discussions with mindSHIFT begin: "We've had casual discussions for more than a year." Talks intensified toward the end of 2010.
  • Will mindSHIFT hire Alpheon's staff: "We have 29 employees. Everyone has been offered positions and accepted employment with mindSHIFT. And we're hiring. Aggressively."
  • How about valuation? What did mindSHIFT pay to acquire Alpheon?: Undisclosed since both parties are privately held.
I've reached out to mindSHIFT for additional perspectives. Updated Jan. 5, 12:45 p.m. Eastern: mindSHIFT CEO Paul Chisholm shares his perspectives here.

Bigger Picture

This is the third MSP-related merger or acquisition since MSPs rang in the New Year. The other two deals involved:
More deals are coming. Sources say mindSHIFT is kicking around at least one more M&A deal in the near future. (Donovan declined to discuss anything beyond the mindSHIFT-Alpheon deal.) Also, we're aware of another MSP that's planning at least one acquisition this month.

Still, MSPmentor cautions readers to look closely at each M&A deal -- because no two deals are alike. In many cases, MSPs are buying up regional VARs simply to acquire customer lists. But in some rare cases, strategic deals are occurring. I believe the mindSHIFT-Alpheon deal fits that description.

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