Another Managed Service Provider Acquired
For the third time in less than three weeks, a managed services-centric company has been acquired. This time the deal involves 7ticks, an MSPmentor 100 company that serves the financial services vertical. Here’s a look at the deal — and yes, the financial multiple — plus chatter about a big IT company that may also be looking to make a buy.
First the hard news: Interactive Data Corporation — a publicly held financial market data company — is buying 7ticks LLC, a privately held company that specializes in electronic trading networks and managed services. The transaction is expected to be completed in early 2010, contingent upon closing conditions, according to a joint press release.
So, what multiple did 7ticks fetch? Specific details are emerging. According to Boston Business Journal, the deal could be worth from $30 million to $51.2 million — the value varies based on certain performance targets 7ticks still has to meet.
Now let’s do some quick math: The Boston media site says 7ticks will generate about $10.6 million in revenue in 2009, meaning the 7ticks sale apparently will fetch a revenue multiple of 3X to 5X.
7ticks was ranked No. 17 in our second-annual MSPmentor 100 survey and report, which tracks the world’s most progressive managed service providers. (The third-annual report debuts in 1Q 2010.) 7ticks’ recurring revenue more than doubled from 2007 to 2008, our research revealed. And CTO Scott Caudell landed on our 2009 MSPmentor 250, which tracks the top executives, entrepreneurs and experts in the managed services market.
Buy, Sell or Hold?
This is the third MSP-oriented deal in recent weeks. The others involved Quest Software buying PacketTrap (Dec. 3, 2009) and High Street Technology Ventures disclosing its intent to acquire MSP Services Network, another MSPmentor 100 company (Dec. 9, 2009).
There’s also continued chatter involving a “closer” working relationship between ConnectWise and CharTec… (we’re still listening closely to that chatter).
We realize each company above focuses on a vastly different poption of the managed services market. But they do have some similarities — including an emphasis on recurring revenue and remote management, and prominent positions on the MSPmentor 100 and/or MSPmentor 250 lists.
Meanwhile, we’re hearing channel chatter about Hewlett-Packard once again taking a close look at the managed services market for a potential software target. We’re still digging in HP’s back yard for concrete news. We’ll let you know what we hear.
Why all the activity now? As we’ve stated, the managed services market is highly fragmented. Some companies are sitting on cash. Others are enjoying strong growth. And the end of 2009 is approaching, meaning that some companies want to tidy up their books with business deals before the New Year arrives.
We’ll keep you posted as more potential combos surface.