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The Next Big MSP Merger, Acquisition Rollup: Led By MXLG?

Another MSP rollup strategy — involving the potential purchase of multiple IT service providers — is under way. This time, the power broker is MXLG Acquisitions Limited, a recently formed investment firm that wants to acquire multiple IT service providers and MSPs in the United Kingdom.

MXLG has big, deep pocketed financial backers — including Liberty Global (likely the world’s largest international TV and broadband company)  and technology-focused merchant bank MXC Capital.

Together, Liberty and MXC in late 2017 inked a deal to start buying up SMB-focused IT service providers across the UK. Together, the companies formed MXLG specifically for that purpose. At the time, the companies said:

“The newly established joint venture company [i.e., MXLG] will initially seek to undertake a series of acquisitions in order to create an enterprise of size and scale, taking advantage of MXC’s knowledge and understanding of the market, Liberty Global’s existing network and solutions, as well as the opportunities both parties see to consolidate what remains a fragmented market.”

Fast forward to present day, and MXLG has confirmed its first acquisition. The seller is SICL, an IT infrastructure and network specialist that works closely with Cisco SystemsDell EMCMicrosoft and Veeam.

Funding the Deal

Under terms of the deal, MXC, together with a co-investor, have each made an equity investment of £2.35 million (roughly US$3.29 million) into MXC JV Limited to part fund the acquisition. ChannelE2E doesn’t know additional financial deal terms or valuation metrics.

In a prepared statement, MXC CEO Ian Smith said:

“I am pleased to be able to announce the first acquisition by our joint venture with Liberty Global. SICL represents the first step in MXLG’s strategy of building an IT services provider focused on small and medium sized business customers within the UK. We are excited to have commenced this journey.”

MSP Rollups: Tempting But Never Easy

Plenty of organizations and investors have contemplated MSP rollups in recent years. Most of the chatter involved U.S.-based targets. Companies like Konica Minolta’s All Covered have been particularly active in the sector over the past decade.

And more recently, private equity firms have been acquiring “platform” MSPs -upon which the PE firms could stack additional, smaller MSPs to gain scale.

Still, rollups aren’t easy — especially since so many MSPs have vastly different cultures, business processes and back-end technology platforms.

Back at MXLG, we’ll be watching for additional M&A deals — and the potential platform or business integrations with today’s SICL purchase.

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