ScanSource CEO Mike Baur said he sees the TSD’s recent $220.5 million MicroAge acquisition complementing its tech advisor (TA) business, and he will look to add more MSPs to the portfolio.
ScanSource closed the acquisition earlier this month, bringing 50-year-old MicroAge’s MSP and solutions integration businesses under its umbrella. ScanSource also owns technology services distributor (TSD) Intelisys that sells through TAs.
“We've said that we believe we need some additional service capabilities beyond what MicroAge brings,” Baur said. “MicroAge is still primarily a traditional reseller of devices and hardware with a smaller MSP arm, built out after they acquired a storage company [cStor] four years ago. We want to acquire a couple of more smaller MSPs, but it's not a roll-up strategy. It's about specific offers the channel needs.”
Baur pointed out that MicroAge is a major partner of infrastructure vendors Dell and Lenovo and they have a strong Microsoft practice. They also have an Octem.ai paid consulting business that co-sells with TAs.
Intelisys works with around 30 MSPs already. Baur said owning MicroAge can help Intelisys sell through MSPs without competing with its current MSP partners.
“MSPs each have their own place in the market, and there are thousands of them, so no, we're not worried [about competing with partners],” he said. “MicroAge has staked out a unique position bridging device sales with deep data-center expertise. We want to be the MSP provider for the TA where appropriate. That doesn't mean replacing the many MSPs already selling through the channel. But we believe some of those capabilities need to sit at Intelisys itself.”
Mike Baur
Keith Housum, a research analyst at Northcoast Research who covers the distribution space, said ScanSource is “blurring the lines” with the MicroAge acquisition.
“What I mean by that is, it’s going to have some of the hardware distribution that it would never cover before,” he said. “MicroAge has been trying to make a move to the services side, but there’s still a lot of hardware there. ScanSource has always been that specialty technology company, so it's going to be interesting to see how they maneuver in the space.”
Baur said he sees MicroAge selling alongside a TA and perhaps a ScanSource VAR, “none of them competing, all selling to the end user together. That’s the vision.”
ScanSource reported a 17% year-over-year revenue increase to $151.07 million in its last quarter and forecast an increase of between 6% and 10% over the next year, not counting MicroAge sales.