MSP Acquired: ImageNet Consulting Buys IT Guys
Founded in 2005, IT Guys is a managed IT company that provides data protection, cloud computing, and IT support for businesses in Oklahoma. Founder John Stringer will remain with the company as virtual chief information officer, and IT Guys’ 11 employees will retain their jobs, according to local newspaper The Oklahoman.
Founded in 1956 as Southwest Typewriter Company, ImageNet began providing managed services in the early 2000s. In recent years, the company has been expanding its managed IT local service areas.
ImageNet is partnered with Canon, HP, Konica Minolta, Kyocera, Samsung, and more. The company has a number of offices in various cities across six different states.
M&A: Managed Print Services, Office Equipment Dealers
This is by no means the first deal struck between an office equipment dealer and MSP. Consolidation between the two has been rife in recent years. Among the deals ChannelE2E has tracked:
- Madison, Wisconsin’s Gordon Flesch Company acquired Advanced Systems Inc (ASI), an office technology dealer in Cedar Falls, Iowa.
- UBEO Business Services, a printer, copier, and document management solutions company, bought AmPan Business Systems, a provider of multifunction office equipment.
- Marco, a St. Cloud, Minnesota technology service provider acquired copier/printer company Accent Business Solutions
- The merger of The Office Center and 360 Office Solutions
- QRX Technology Group acquired Kerr Norton
- Repro Products acquired 4ColorLaser, a Xerox Authorized Dealer
- Loffler Companies acquiring Copier Business Solutions
- Business Complete Solutions (BCS) acquiring StarPoint Advantage
Valuations for office equipment deals can vary widely. The same is true for managed IT service providers. Most MSPs — which tend to have heavy recurring revenue — are selling for about 4X to 8X annual EBITDA, ChannelE2E believes.
The multiples tend to be 4X to 6X for all cash up-front deals. The higher valuation deals tend to involve pure recurring revenue, healthy EBITDA profit margins (15 percent plus) and performance-based earn-outs over a year or two, according to ChannelE2E conversations with M&A participants. In rare cases, top-notch MSPs can fetch 10X annual EBITDA valuations.