Opinion: Snowballing consolidation a sign of the times

Opinion: Snowballing consolidation a sign of the times

A few weeks ago a visiting Australian-based vendor’s PR manager asked me during lunch if there has been as much consolidation in the local channel as there has been across the ditch.

I replied that things were rather quiet on the merger and acquisition front here.

Of course, at the time I was unaware that Maclean Computing, Certus and Integral were putting the finishing touches to their respective acquisitions of ATL Systems, UtilityAP and APL Plus.

These acquisitions indicate that while some channel operators are faring well, others are not, which clearly creates opportunities for fast growth by those with extra cash to spend.

All three acquiring companies appear to have been bolstered by good times of late.

Last year Integral took out the Supreme Award at the IBM Business Partner Awards, along with winning two other categories, while Certus was highly commended.

Integral also won at Microsoft’s inaugural New Zealand partner awards last year, where Maclean was a winner too.

But success is not just measured by trips to the podium.

Both Maclean Computing and Integral seem to have benefited from the injection of fresh blood – in the form of sales and marketing directors Chris Maclean and Catherine Blinkhorn respectively.

In contrast, ATL had become a shadow of its former self, while UtilityAP, although operating for a decade, was a little known minnow.

Of the three companies acquired, APL Plus seems to have been the more successful operation of late. It had 40 staff and claims its revenue has doubled since the now former owners Drew Gilpin and Lincoln Watson took over the business from Advantage Group in 2004.

Nevertheless, its profile in the market has been lacking.

Three acquisitions by significant industry players in one month is not a common occurrence, and they are an important indication of current market conditions.

Both Maclean and Certus do not rule out further acquisitions, with industry experts agreeing that more consolidation is sure to follow.

The reasons are easy to spot.

First, the current economic climate will continue to take its toll.

Increasing fuel costs impact nearly all aspects of running a business, especially those that rely on having salespeople on the road or delivering products to customers. In addition, increased living costs will drive up wage demands, which in turn will inflate the price of goods and services across the board. As the crunch comes, more companies will have to choose between selling up or sinking.

Second, technology is becoming more complex and being “all things to all people” is becoming increasingly difficult. Unfortunately this is where smaller operators that have failed to specialise could come unstuck.

Finally, entrepreneurs continue to create great technology, which often needs the wings of a bigger operation to fly on.

However this round of consolidation plays out, expect to see quite a different looking channel landscape in the near future.

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