mindSHIFT's Buyout of ORBIT: Four Years in the Making

mindSHIFT's Buyout of ORBIT: Four Years in the Making

Earlier today, mindSHIFT said it acquired ORBIT Systems, a managed services provider in Minnesota. But this wasn't an overnight managed services deal. Indeed, mindSHIFT and ORBIT have spoken off-and-on about an M&A engagement for about four years, according to mindSHIFT CEO Paul Chisholm (pictured). So why is the deal finally happening now? Chisholm revealed the answer during a phone call with me about 30 minutes ago. I think his thoughts reveal the single biggest decision facing MSPs right now: Continue to march forward alone, or pursue an M&A deal in order to gain economies of scale for cloud computing. Here's the update.

First, there's the basics of the deal: By acquiring ORBIT Systems, mindSHIFT pushes beyond its East Coast office locations to gain a physical footprint in the midwest -- though Chisholm is quick to note that mindSHIFT customers are located worldwide.

Also, ORBIT isn't a "typical $1 million to $3 million small MSP," Chisholm noted. The company has roughly 50 employees and a cloud strategy that mirror's mindSHIFT' initiatives. "In terms of the companies we've acquired, ORBIT is the closest thing we've seen that's a mirror image of us and our processes," said Chisholm.

mindSHIFT and ORBIT have been talking off and on for four years, but ORBIT wasn't ready to sell. Why pursue -- and complete -- the deal now? Two words: Cloud computing. As small MSPs seek to wrap their arms around the cloud, they're realizing that they need to make major IT and capital investments or partner up. Through the mindSHIFT deal, ORBIT's team gets the opportunity to leap forward faster, Chisholm said.

Looking ahead, mindSHIFT continues to analyze more MSPs for potential acquisition but it doesn't sound like more deals are imminent. Also, mindSHIFT is now above $100 million in annual revenues, so the company has largely avoided small $1 million MSPs that have break-even businesses. My guess: Chisholm will pursue "selective acquisitions" involving mid-size MSPs in the mid west and out on the west coast. But again, it doesn't sound like additional deals are imminent.

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