In August 2016, we wrote about the wave of consolidation among top integrators and outlined the rationale for the increased M&A activity and predicted increased activity. It seems our thinking was correct as two more deals were announced in the past two weeks.
First, on November 29, Utah-based Tower Arch Capital recapitalized Corbett Technology Solutions. Based in Chantilly, VA with over $40 million in revenue, Corbett is a Top 25 integrator and represents a platform investment for Tower Arch. Corbett covers a broad range of verticals in the Mid-Atlantic including corporate, educational, health care, government, non-profit, religious, and public sectors.
On the next day, private equity-owned industry leader AVI-SPL acquired Anderson Audio Visual. Headquartered in San Diego, Anderson immediately helps expand AVI-SPL’s West Coast presence and adds over $65 million in revenue to the platform. We expect AVI-SPL’s owner, H.I.G. Capital, to aggressively pursue add-ons for the business.
Clearly, there is increased activity and interest in the sector. Top integrators are pushing for growth through acquisitions that compliment their business areas and drive operational efficiencies. Further, as integrators invest in service offerings with recurring revenue, they need to drive ROI opportunities across a larger client universe – M&A can accelerate this dynamic. Integrators need to ask themselves the following question: Am I a buyer or a seller in this market?
As a technology supplier to these top integrators, how will you increase your leverage as your customers consolidate. Focus on delivering unique and value-added solutions that address real world challenges. How can you partner with these integrators to drive revenue? The more you engrain yourself in their workflow, the more valuable you become. Be weary of account concentration and always push to open new doors and markets to increase revenue diversity.
As always, please reach out if we can be helpful in navigating these M&A markets.