M&A activity was so strong in 2017 it looked as though it was on track to set records. Big and small names alike saw their names splashing across headlines, while analysts opined on the likelihood of the trend continuing into the new year.
One company that seems likely to continue the trend is CloudScale365. The firm has racked up at least five acquisitions in the last two years, the most recent involving FuturTech Consulting. That latest deal unities CloudScale’s business SaaS and cloud hosting business and FuturTech’s specialty in IT consulting and application development.
CloudScale also gains FuturTech’s experience in technology planning, application development, Unified Communications, office cabling services, and desktop support to its current solutions portfolio, which is based around public, private, and hybrid cloud services, hosted Sharepoint and Exchange, and device and infrastructure management. The combined company will support more than 3,100 customers globally while also leveraging regional footprints in Nashville (Tennessee), New York and Philadelphia (Pennsylvania).
“The merger makes our companies stronger providing expanded resources and services that will be a tremendous benefit to our clients, and more growth opportunities for our employees; a real win-win for everybody,” said Michael R. Nardo, FuturTech Consulting CEO and founder.
According to the company, CloudScale365 will maintain its branch office locations while over a dozen new full-time business development, engineering, and customer service jobs will be created at its Delaware location. The surviving corporate entity -- CloudScale365 -- remains privately held. The senior management team combines leaders from both companies, while Nardo has taken a seat at the CloudScale365 Board of Directors’ table.
CloudScale365 has seen a range of deals over the last few years. Chief among them:
- In December 2016 it merged with Philadelphia-based Utopia Systems, expanding its SharePoint and database hosting, as well as its VPS services.
- Before that, CloudScale purchased Portsmouth, New Hampshire’s TTLC Internet, boosting its B2B customers to more than 3,000 across the United States and Europe.
- In August 2015, the company acquired Link2theCloud and Link2Exchange of Portsmouth and Sanbornville, N.H. respectively. Those deals boosted the firm’s presence in the HealthCare and Legal hosted IT services vertical markets.
- Also in August 2015, CloudScale365 bought up mobile device management (MDM) and hosted exchange company ExchangeMyMail. This allowed the company the ability to provide businesses and government agencies using hosted solutions with a number of solutions to more securely manage their information. It also prompted CloudScale365 to redesign its channel partner program and create an aggressive offering.
The overall M&A forecast for IT services providers remains strong -- especially since many business owners are aging out of the market and plenty of MSPs are seeking larger regional footprints or specialty expertise to lift recurring revenues. Private equity firms also are scouring the market for potential deals. Still, finding quality MSPs with substantial recurring revenues and healthy profit margins is becoming more difficult amid the market consolidation.
Additional insights from Joe Panettieri.