Four Things You Need To Know About Computacenter’s FusionStorm Buy
Computacenter Is A Services Powerhouse
London-based Computacenter is an unrecognized services superstar with more than $1 billion in services business, said Martin Wolf, president of martinwolf M&A Advisors of Walnut Creek, Calif., a channel M&A deal maker who advised Computacenter on its just announced acquisition of solution provider FusionStorm.
The company competes head-to-head in big deals against the likes of Accenture, IBM Global Services and India-based outsourcing providers.
"A big piece of Computacenter's business is servicing large global accounts," he said. "Nobody knows that. It's a big deal. They are unique in that they compete with CDW, SHI and Insight but they have a large services portfolio. They have a very high percentage of services. Their competitors are not just the product resellers. It is Accenture and the big India outsourcers."
Computacenter previously partnered with Compucom to service large global accounts in the U.S., but the deal ended prior to Compucom's $1 billion blockbuster merger with Office Depot last year.
Among the European corporate giants that Computacenter provides IT products and services for are: German automaker BMW Group, British public broadcaster Channel 4 and British housebuilding company Crest Nicholson.
Meanwhile, FusionStorm – one of just a handful of partners holding the Dell EMC Titanium Black status - has received multiple Partner of the Year honors including Dell EMC Enterprise Solution Provider Partner of the Year, Juniper Innovation Partner of the Year award, and a Cisco Territory Partner of the Year award. That company was growing at a double-digit clip and was on track to do $1 billion in billings this year.
Computacenter Is Here For The Big Fish
Computacenter CEO Mike Norris (pictured) told CRN that the company has its sights set exclusively on enterprise clients in the U.S., especially those with a European presence.
“This is not an SMB play. We do big customers. We will only target large organizations. We clearly have a significant footprint in the European market. So we’re the largest reseller in Europe by quite some margin. Our services business is very well developed here, so we will certainly think for any US customers that have a significant European presence and want to see Europe looked after, we will lead with that as an offer.”
Steady As She Goes
Norris said for a company like FusionStorm that has a loyal base of employees and customers, change can be disruptive. His first order of business, is to make sure it is not. To do that, he flew out Monday for a week-long tour of FusionStorm sites in the U.S.
“The first thing to do is stabilize what we’ve got. This business has been around for a long time. It has very loyal employees that now have different owners. The first thing I want to do is give the people that work for the business confidence in their new owners. That’s number one. And I want customers to have confidence in their new owners. That’s my focus for the next few months, is make people comfortable with us as the owners, both the employees and the customers.”
‘Kind Of A Big Deal’
Norris, who runs the $5 billion, multinational systems integrator, has a history of being understated. He described the blockbuster purchase of FusionStorm, which marks Computacenter’s entry to the U.S. as “not a game changer.”
“We spent less than 10 percent of the value of the company buying this. It’s kind of a big deal because it’s in another continent, and its stretching the business. But equally, it’s not a massive deal for us. Just under 10-percent of our market cap, so not a game-changer so to speak.”
Asked about the financing -- which spaced out the payments based on FusionStorm’s performance -- Norris said he was being prudent.
“It’s the cautious nature of us Brits. We are cautious. So there’s a chunk of money. There’s $70 million for the shareholders today. There is an option for the shareholders to make another $20 million. So the majority is paid now. So they can get up to $90 (million) on two earn-outs, $10 (million) this year, $10 (million) next year. In addition to that we’re pumping $45 million into the US business to give it a better capital structure than it has today. If everything works well, we pay 135, enterprise value for this.
Meet The Customer Around The World
Norris said customers need support wherever their business takes them. Computacenter pushed into the U.S. to give them the best service possible.
“A significant portion of our customers have a global requirement. Whether that’s European customers globally, or U.S. customers, globally. Customers have more and more of a global requirement and they look to their providers to support them wherever they go.”
“We were very clear. We’ve built a services business in the US. Quite small. About 600 or 700 people, which we built organically. We wanted to have a product resale capability around enterprise products to add to that services business. We set out about 15 months ago and I’ve met a lot of people who loosely fit the criteria that I set aside. I wanted it to be this size, this geographical spread, this focus of customer. A number of people fit that bill. Obviously, I think FusionStorm fit it best because that’s why we bought that one.”