5 Partner Takeaways On The Synnex-Tech Data Merger

Solution providers tell CRN that the deal to create a $57 billion IT distributor will bring together ‘the best of two worlds’ and create major opportunities for partners.

Teaming Up

As Tech Data and Synnex prepare to join forces, solution providers that work with the two IT distributors say the opportunities for partners to benefit will be massive. On Monday, Tech Data and Synnex announced a merger deal that will result in a $57 billion company that is the largest IT distributor in the world and serves more than 150,000 customers. Tech Data CEO Rich Hume will lead the combined company, and told CRN in an interview that the move will be a “huge win” for partners—with the combined company offering “the broadest portfolio and the ability to have more capacity for investment that will accelerate next-generation technologies.” The $7.2 billion deal will also see Synnex President and CEO Dennis Polk become executive chair of the company’s board. The merger is expected to close in the second half of 2021.

What follows are five key partner takeaways on the Tech Data-Synnex merger.

(CRN editors Steven Burke and Mark Haranas contributed to this report.)

‘Best Of Two Worlds’

At Tempe, Ariz.-based MicroAge, “we’re excited as this rolls out,” said Larry Fulop, vice president of marketing and technology at the solution provider. “I think it’s going to be the best of two worlds coming together.”

MicroAge, which is No. 147 on CRN’s Solution Provider 500 for 2020, is a partner of both Tech Data and Synnex--and “they both have their strengths,” Fulop said.

“Anytime two outstanding organizations come together, you get the best of both [across] their sales approach, supplier relations, technical and engineering side,” he said. “We think there’s a great opportunity to take advantage of that.”

Competing With Ingram Micro

The merger between Tech Data and Synnex will “definitely” put pressure on IT distributor Ingram Micro, said Michael Goldstein, president and CEO of LAN Infotech, a CRN Security 100 MSP based in Fort Lauderdale, Fla.

“You have customers that are sitting out there who might or might not have had a good experience with Ingram who are on the edge. And now you have the power of two versus the power of one,” Goldstein said. “Taking two big programs and putting them into one really just helps us as MSPs to have a further choice that’s out there. This is big, exciting news for us.”

Combining the two distributors to create a $57 billion distribution behemoth would make the company nearly $10 billion larger than Ingram Micro, which reported $47.2 billion in sales in 2019.

“If you’re sitting at the top, whether it’s a sporting event or a leader in a certain market, being No. 1 is never easy. It’s hard to keep up there and there’s always guys trying to chop you down,” said Goldstein. “I think you’re seeing that here.”

Implications For D&H

Joshua Boyd, founder and CEO of Nashville-based solution provider Computer Pros, said the news of the merger is “not entirely shocking” following Tech Data’s acquisition by private equity firm Apollo Global Management last year. “It makes sense that they would continue down the road of acquisitions,” said Boyd, whose company works with both Tech Data and Synnex.

Overall, “I would assume this would give them some sort of leverage with the manufacturers, as well as with competing against other distributors,” he said. “They’re going to have increased their buying power quite a bit.”

It will also be interesting to see what sort of impact the acquisition has on SMB-focused D&H Distributing, Boyd said. “I could see it putting additional pressure on D&H. But it also might end up being an advantage for D&H, because they continue to focus on that SMB space -- and this may take Synnex out of that space and more into the enterprise space,” he said.

In an interview with CRN, D&H Co-Presidents Dan Schwab (pictured left) and Michael Schwab (pictured right) told CRN that they see nothing but opportunity in the upcoming merger between Tech Data and Synnex. The $5 billion company’s focus remains on the North American midmarket and SMB channel business, giving it the ability to continue its growth even in the face of its huge competitors, the co-presidents said. “Michael has used this phrase: We’re kind of the Rock of Gibraltar for the channel. We’re not going anywhere,” Dan Schwab said.

Service Offerings Will Be Key

Bob Keblusek, chief technology officer at Downers Grove, Ill.-based Sentinel Technologies, said he expects the merger to impact how channel partners select their preferred IT distributor going forward.

“Obviously, there has to be significant Tech Data and Synnex overlap in what they do, but they evaluated their businesses and decided there’s a lot of synergies as well. So it’s very interesting what will come next,” said Keblusek, who partners with Ingram, Tech Data and Synnex. “It’ll be interesting to see how they now compete with the Ingrams and the Arrows of the world.”

Keblusek said distributors are just as important as ever to channel partners especially with consumption-based services being top of mind. Having a successful Tech Data and Synnex combination could reshape the distribution market landscape.

“When we choose who we wanted to have as our preferred distributor for cloud, for example, it very much came down to the process, the billing and those type of things,” said Keblusek. “So I’m very interested to see what new service offerings that they’re going to bring to the table -- that’s as important as anything. This is exciting news.”

Merger Is In Good Hands

Bob Venero, CEO of Holbrook, N.Y.-based solution provider Future Tech, No. 96 on the CRN Solution Provider 500, said that with Hume (pictured) leading the combined company, he is confident that the blockbuster deal will bring big benefits to partners.

“Rich’s partner expertise is unmatched from his days at IBM through now leading Tech Data and Tech Data-Synnex,” said Venero. “With Rich at the helm I know that we’re going to see value out of this deal.”

Venero said Hume is always on the front lines ready to work with partners to ensure customer success. “We recently needed help and support and Rich made sure we got it. That led to a very happy customer and success for Future Tech. Rich is a long-time supporter of the channel community. He knows what it takes to get things done for partners, and he knows how to invest to make sure partners are successful.”