Managed Services Acquisition: mindSHIFT Buys ORBIT Systems
Say hello to the ninth managed services acquisition that MSPmentor has spotted so far in 2011. The latest deal involves mindSHIFT Technologies — a perennial MSPmentor 100 company — acquiring ORBIT Systems, a managed services provider (MSP) in Minneapolis-St. Paul, Minn. This is mindSHIFT’s second MSP-related acquisition of 2011. Here are some initial details.
According to a prepared statement, the ORBIT Systems acquisition is “instrumental in expanding mindSHIFT’s presence across North America and cementing the company’s position at the top of the MSP industry.” ORBIT has 54 employees who will remain with the company following the mindSHIFT deal. For its part, mindSHIFT says it now has 492 employees, including the staffs of ORBIT and Alpheon — another MSP that mindSHIFT acquired in January 2011.
While Alpheon focuses on the health-care vertical, ORBIT appears to be more of a horizontal MSP that has been making cloud-centric investments. Indeed, ORBIT offers managed and cloud services branded as OfficeReady Solutions. The lineup includes everything from 24×7 remote monitoring to virtual desktop infrastructure (VDI) and hosted VoIP.
In a prepared statement, Paul Chisholm, CEO of mindSHIFT, claims ORBIT has been a “pioneer in developing cloud-based services and they have built a great foundation on which to grow.” The ORBIT client base includes small to mid-size companies headquartered in the Seven-County Metro area (St. Paul and Minneapolis).
I’ve reached out to mindSHIFT for additional perspectives on the deal. Updated, 12:40 p.m. ET Feb. 8: mindSHIFT CEO Paul says explains the ORBIT acquisition here.
MSP Feeding Frenzy?
Meanwhile, there have been at least nine MSP-related mergers and acquisitions so far in 2011. In addition to mindSHIFT’s buyouts of ORBIT and Alpheon, previous M&A news has involved:
- Fraser Advanced Information Systems buying PennLantic Corp.
- Ancero acquiring Integrated Network Consulting Inc.
- Netgain acquiring DLP Technologies
- Microholdings US acquiring ConnectIT Networks Inc.
- Konica Minolta acquiring All Covered, a national MSP that plans continued acquisitions
- Printelligent acquiring DirectPointe’s managed print services business
- Fully Managed acquiring HIT Business Solutions as part of a Canadian expansion plan
Also of note: A growing number of consulting firms and advisory boutique shops are striving to assist MSPs with potential funding, valuation enhancement or M&A deals. Potential advisors include:
- Cogent Growth Partners, launched by several former MSPs;
- Martin Wolf Securities, which has advised on hundreds of IT services deals for more than decade;
- MSPXchange, launched by The Utility Company with help from several partners. We expect some potential MSPXchange news later this month;
- Technology Capital Investors, which MSPmentor covered here; and
- Weaver & Associates Ltd., launched by MSPAlliance President Charles Weaver.
Still, MSPmentor cautions readers: MSP-centric M&A deals seem to vary greatly in terms of valuations, financial terms and earn-outs. We’ve heard of some deals involving 0.5X recurring revenue multiples, and other deals involving 1.5X recurring revenue multiples. At times, the M&A hype seems overwhelming — though it’s healthy to remember 70,000+ North American VARs and MSPs remain independent. Translation: Despite the hype everyone isn’t shacking up.
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