Last week was a huge week in the history of the telecom and IT channels, and an especially huge week in the history of Intelisys. On August 8, ScanSource, Inc. announced a definitive agreement to acquire Intelisys. We gathered some of last week’s media coverage here for interested channel sales professionals, VARs, MSPs, telecom agents, our Sales Partners and Supplier Partners. You can also read the full press release here.
A Watershed Moment That Means We’re Going to Need a Bigger Boat
CRN’s Associate Editor Michael Novinson interviewed ScanSource CEO Mike Baur to learn more about the acquisition of Intelisys. According to CRN, only 10% of the telecom services market is served by the indirect channel today. The channel holds many opportunities for VARs and telecom sales professionals wanting to transition to recurring revenue.
Novison quoted Baur, “‘This is a watershed moment in the telecom/master agent space,’ Baur told CRN. ‘We’re delighted to be signed with these guys. They are the class of the industry.'”
Gina Narcisi, Senior Associate Editor of CRN, interviewed Intelisys for their view on the acquisition. “‘For Intelisys, which will now have the reach to bring more partners on board with recurring revenue opportunities, the master agent is ‘going to need a bigger boat,’ Intelisys’ president Jay Bradley enthusiastically told CRN.”
Local Coverage on the East and West Coasts
The acquisition made local news both in South Carolina and California. Staff Writer Bill Swindell at the The Press Democrat in Santa Rosa, CA; Reporter Amanda Coyne at the The Greenville News in Greenville, SC; and The Upstate Business Journal in Greenville, SC all covered the announcement for local communities. The full articles are available here, here, and here.
Acquisition News Goes International
Antony Savvas at ChannelBiz, DH Kass at Channelnomics, and Josh Bud at Channelnomics in the UK covered the acquisition news.
Savvas at ChannelBiz reported, “ScanSource VARs will gain access to Intelisys’ portfolio of connectivity and cloud services offerings, as well as the tools and platforms that help partners build recurring revenue streams, it said.” Read the full ChannelBiz article here.
“The wider implication of the buyout may be the opportunity for ScanSource’s VARs to leverage Intelisys’ template to transition to a recurring revenue business model,” Channelnomics’ Kass wrote.
Also at Channelnomics, Bud quoted Baur as saying, “‘Intelisys has helped us to move to more products as-a-service. Infrastructure-as-a-service – everything as-a-service – is the clear message from our end-user community to the channel.'”
Capitalizing on Next-Generation Opportunities
Joe Panettieri at ChannelE2E reported on the estimated deal valuation, which included an initial purchase price of $83.6 million, plus another potential $150 million earn-out–a $233.6 million total potential deal size.
In a second article, Panettieri ChannelE2E interviewed Intelisys President Jay Bradley, Intelisys SVP Cloud Transformation Pryfogle, and ScanSource CEO Mike Baur, outlining the history and timeline of the acquisition.
MSPs Note the News
The Opportunities Are Immense
MSPmentor’s Editor-in-Chief Aldrin Brown interviewed Mike Baur, Jay Bradley, and Andrew Pryfogle for the details on how the acquisition came about, and what it means for the channel.
Brown quoted Bradley, “‘Part of why partners really are excited about doing business with us is because we protect them and we make sure that they’re seeing the right opportunities and selling the right carriers … As we got to know these guys, we determined that this is something that could work.'”
Pryfogle believes that financial support through the Intelisys Advanced Commissions Program and the Intelisys commitment to education through Cloud Services University will be the key factors in helping VARs make the transition to the two-tier system. “‘When we start to apply these best practices to a much larger community at ScanSource, we think the opportunities are boundless.'”
In a second article, Brown spoke with Mike Baur for an in-depth Q&A. Brown quoted Baur, “‘What Intelisys has figured out is a way to enable a new channel to emerge. The reason we’re interested is we’re trying to help our VARs find this path. Many, many VARs cannot risk doing this on their own without a partner.’
“‘It could be an agent selling product now, who has not wanted to or couldn’t in the past. Or, it could be a VAR selling services … We’re going to make sure both groups have opportunity that is immense. And we think that this opportunity is vast.'”
Bringing Recurring Revenue To the VAR Community
CRN’s Associate Editor Michael Novinson and Senior Associate Editor Gina Narcisi also went in-depth on recurring revenue and the transformation that many VARs partners can expect over the coming months. Quoting J.R. Vernick, Co-Founder of RDS Solutions and Intelisys Platinum Partner, Novinson and Narcisi wrote, “‘ScanSource is buying Intelisys because of their performance in the [telecom] space,’ Vernick said. ‘It’s about bringing in that recurring revenue stream that Intelisys has been so successful with.'”
Read the full CRN article here.
In a separate article, CRN’s Novison wrote, “The deal represents a stunning bid by the $3.2 billion distributor with a traditional on premise VoIP and videoconferencing business to disrupt the value-added distribution landscape with a new recurring revenue telecom cloud services portfolio.”
The full article is available here.
CRN’s Narcisi interviewed Mike Baur in a third article, and asked what the transition to recurring revenue will mean for the VAR community. Quoting Mike Baur, Narcisi reported, “There’s this $150 billion cloud and telecom market today and very little of that market is being serviced by the IT channel. We determined that there are several reasons why VARs haven’t gotten there yet. What we have learned is two major things that Intelisys used to help their agent partners understand, and it’s the same things that are going to help the VAR channel,” referencing the Advanced Commissions Program and Intelisys Cloud Services University.
The full CRN article can be read here.
Attention From the Financial Industry
TheStreet, a financial media company, also covered the news for its users and subscribers. TheStreet’s full article is available here.
Channel Distribution Revolutionized–Now What?
Kris Blackmon, Editor-in-Chief for The VAR Guy (sister site to MSPmentor), sat with several VARs and MSPs and talked about the state of the channel after the news of the acquisition. Blackmon wrote, “Journalists and industry experts have called the move ‘bold,’ ‘a watershed moment’ and ‘one of the biggest announcements in the Services Provider Channel to date in recent times.’ While the acquisition can indeed be called all of those things, there’s another, quieter sentiment echoing through the channel: Finally. For resellers, this moment has been a long time coming.
“But while some could describe the potential of the acquisition as revolutionary, the immediate future is unlikely to change drastically. Paradigm shifts take time,” said Blackmon.
The VAR Guy’s full article is here.
More Master-Agent Distributor Partnerships in the Future?
Gina Narcisi, Senior Associate Editor of CRN, also contemplated the future of the channel. Narcisi writes, “ScanSource’s acquisition of Intelisys could ignite more unions of IT distributors that have historically focused on hardware and software and master agents with thriving telecom and cloud practices, master agent executives say.
“The channel knows that with IT consumption models changing, there could be more consolidation as distributors strive to remain relevant in a world in which recurring revenue is king, and partners look to become full-fledged solution providers in their clients’ eyes.”
Read the full CRN article here.
Tech and Telecom Converge
Founder, CEO and Chief Analyst of The 2112 Group Larry Walsh wrote, “The deal could have significant implications for the channel as it relates to telecom services and the Internet of Things … The rapidly unfolding landscape of IP-enabled devices – many of them autonomous – could evolve into the catalyst for channel convergence. IoT devices, almost by definition, require persistent connectivity. Some distributors are looking for ways to leverage their telecom practices and relationships to facilitate IoT solutions delivered to partners.”
Read The 2112 Group’s full article here.
A Bold Move
Channel Partners Online reported, “This marriage between compute and connectivity distributors has been a long time coming with competition and crossover among the partner firms in the trenches, i.e. VARs, system integrators, MSPs, telecom agents, etc., building up over the past few years — a natural evolution as cloud and mobility take hold.
“‘When you have an industry-leading and publicly traded equipment VAR [ScanSource] acquire one of the most successful master agencies [Intelisys] in the business, it’s certainly a great illustration of the overall strength of our channel,’ said Randy Friedberg, vice president of business development at Converged Network Services Group.”
To read the full Channel Partners Online article, click here.