Apollo Global Management has completed its Tech Data acquisition, the private equity firm and technology distributor disclosed today. But what should Tech Data's hardware, software, cloud and channel partners expect from the deal?
Here are five takeaways to keep in mind:
1. Apollo has MSP, Channel Experience: The private equity firm in 2016 acquired Rackspace and transformed the struggling hosting provider into a multi-cloud MSP that supports Amazon Web Services, Microsoft Azure, Google Cloud Platform and more. Rumors about a potential Rackspace IPO have swirled in 2019 and 2020.
2. Apollo Understands Hybrid Cloud Services, Data Center Solutions: The PE firm acquired mid-market IT solutions provider Presidio in 2015, tucked in multiple acquisitions, and then ultimately sold Presidio. Presidio has extensive data center, mobile, hybrid cloud and public cloud expertise -- including close relationships with Cisco Systems, Dell EMC, VMware, Amazon Web Services (AWS) and more.
3. Tech Data Has Leadership Consistency: CEO Rich Hume continues to lead Tech Data from its headquarters in Clearwater, Florida.
4. Apollo Invests In Its Assets: Some private equity firms focus heavily on cost cuts. Apollo certainly wants to optimize spending. But the private equity firm also focuses heavily on investments -- particularly tuck-in acquisitions that can add value to an asset. Both Rackspace and Presidio benefitted from Apollo's commitment to tuck-in deals.
Apollo will apply that same investment approach to Tech Data. In a prepared statement, Matt Nord, co-lead partner of private equity at Apollo, said:
“Tech Data is a global, market-leading company with an excellent management team and significant opportunities for expansion. As a result of this acquisition and the resources we can bring to bear, Rich and the Tech Data team will have the strategic and financial flexibility to invest in new technology, expand services and pursue transactions that we believe will drive long-term value creation.”
Transactions? That's short-hand for acquisitions, folks.
5. Digital Transformation Investments: As part of its go-forward plan, over the next five years Tech Data plans to invest approximately $750 million in digital transformation initiatives to better serve its channel partners, the company says. This includes investments in technology to expand its StreamOne Cloud Platform, optimize and standardize processes and apply data and analytics to be more agile in a rapidly evolving environment, the distributor asserts.
Admittedly, it can be difficult to measure a company's "digital transformation" progress. And it's difficult to put a dollar figure on just how much a true digital transformation journey can cost. But the $750 million figure at least puts a stake in the ground for partners to keep in mind.
Tech Data's Rivals
Apollo's ownership of Tech Data certainly sounds promising. But the distributor also faces intense competition from entrenched rivals like Ingram Micro, D&H and Synnex, and upstarts like cloud distributor Pax8...