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July 12, 2023
Two big MSP acquisitions hit the channel this week: Thrive picked up IT Freedom in Austin, Texas, and Fulcrum IT Partners bought Stoneworks Technologies of Ottawa, Canada. Both moves play into the acquirers’ current and future strategies in different ways.
Thrive has been seeking companies in Texas to build out its presence in the southern part of the country after it bought MSPs in Florida a few years ago, said Rob Stephenson, CEO of Foxborough, Massachusetts-based Thrive, which has about 29 offices across the U.S., as well as in Singapore; Sydney; the Philippines; and the U.K.
Thrive’s Rob Stephenson
In Texas, Stephenson was looking for a mature company with a strong operational foundation. He says he found it in IT Freedom, a full-service MSP with about 20 employees that was founded by Carey Jung in 1999. The MSP has about 35 enterprise clients, with some supported by private equity capital that has driven expansion. That means Thrive, which has a strong private equity (PE)-focused practice, can count on a growing customer base on which to build recurring revenue generated by proven, replicable solutions.
“They did a really good job of actually grooming client lists and having a real specific focus on Austin-based clients that are growing,” he said, adding that IT Freedom serves a lot of technology companies in the Austin area, while the PE-backed companies are more horizontal.
Keep up with the latest channel-impacting mergers and acquisitions in our M&A roundup.
PE companies look to remove risk from their portfolios, standardize across platforms, flatten costs and establish scalable processes. Thrive delivers that through its through its NextGen Managed Security & Services Platform.
“By partnering with MSPs like Thrive, it gives them an opportunity to do all of that,” Stephenson said. “They understand what things are going to look like on a flat-cost basis going forward.”
Thrive, No. 21 on this year’s Channel Futures MSP 501 ranking, has acquired 18 other companies over the last seven years. Stephenson has his eye on MSPs in Dallas to expand Thrive’s big financial practice and to tap into the area’s energy and technology industries.
The financial market in southern states such as Texas and Florida has blossomed during the last two years, luring companies away from the north with tax breaks and other incentives, Stephenson noted. Thrive will also leverage IT Freedom’s strong reputation for white-glove service to break into state and local government markets in the Austin area.
For more insight on regional trends from Stephenson and other MSPs, make sure to follow our regional breakdowns of Channel Futures MSP 501 rankings, launching July 17.
Stoneworks Jody Burton
Speaking of regions, Fulcrum IT set its sights further north to acquire Stoneworks Technologies, a $120 million MSP with 25 employees. It was founded in 2001 by Jody Burton. The company focuses on the Canadian federal government and public sectors. It counts more than 500 corporate and government customers in Canada.
“Jody is an incredible leader who has built a really great culture with a really small, nimble team that’s able to do quite a bit for their size,” said Kyle Lanzinger, Fulcrum’s president, U.S. and Canada. “That’s always an exciting piece to any of our acquisitions.”
There were three other exciting aspects that attracted Fulcrum to Stoneworks, Lanzinger said. First, its traditional infrastructure, data center and networking capabilities complement the deep cybersecurity practice of iON United, a Calgary-based company Fulcrum bought last year. Second, Stoneworks’ federal government contracts open up a new customer base for iON’s security solutions. Third, Stoneworks’ government clients allow Fulcrum to continue to verticalize and align with particular industries.
“We’re solving solutions for customers based on outcomes that they’re trying to achieve; we’re not just selling them technology,” Lanzinger said. “The public sector is a very, very large and important piece of that for us.”
There another sexy aspect to Stoneworks’ business. The MSP partners closely with Cisco, Dell, Hitachi, HPE and VMware. But it’s also one of only 10 Nvidia Elite Partners in Canada, which gives the company priority access to the chipmaker’s full product suite, included superchips used for large-scale AI applications.
Fulcrum’s Kyle Lanzinger
“The important piece for us is, how do we bring their expertise to the global fold and how we can build out our own our own AI-branded offerings?” Lanzinger said of Stoneworks, adding that Fulcrum is busy developing its AI product strategy.
Fulcrum is not done with MSP acquisitions. It’s looking for more MSPs in the U.S., U.K. and Canada, especially those with capabilities that can help Fulcrum build out its Titanium-branded portfolio of cloud-based security and networking services.
“We’re looking for companies that are complementary in culture and that focus on certain verticals,” said Kelly Carter, Fulcrum’s chief strategy officer. “So it’s not so much a particular geography we’re looking at; we’re looking at the company’s abilities.”
Read more about:MSPs
Jeff O’Heir is a journalist and editor who has spent much of his career covering the business leaders, issues and trends that define the IT and consumer technology channels. His work in print, online and on stage has showcased, educated and connected small and large solution providers, MSPs, channel pros and vendors. During his career, Jeff has also covered engineering technologies and breakthroughs, crime, politics, food and the arts.
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