Private equity firm Court Square Capital Partners has recapitalized Thrive to further accelerate the MSP's push into fast-growth areas such as ServiceNow, automation, artificial intelligence and cybersecurity, Thrive disclosed this morning.
Thrive, a Top 100 Vertical Market MSP and Top 250 MSSP, will continue to pursue organic growth along with additional acquisitions -- including a focus on larger IT service providers.
Pull back the curtain a bit, and Court Square is now Thrive's majority owner. However, it's important to note that private equity firm M/C Partners and Thrive's senior management team also remain investors in the MSP. Those investors see this recapitalization as a "re-financing” to load the Thrive coffers and reinvest in the MSP's platform; sales & marketing activities; and additional acquisitions -- including larger MSP targets, Thrive CEO Rob Stephenson tells ChannelE2E.
This is M&A deal number 74 that ChannelE2E has covered so far in 2021. See all technology M&A deals for 2021 and 2020 listed here.
Thrive Business Journey, MSP Evolution
Thrive has been growing rapidly in recent years -- both organically and through M&A. Still, the MSP's formula for success took multiple years to fine-tune and optimize. Part of the challenge involved multiple ownership changes over the past two decades.
Here's a timeline of Thrive's business journey, according to ChannelE2E research:
- 2007: Thrive Networks was acquired by office supply retailer Staples and occasionally struggled under Staples' ownership.
- 2014: Communication services provider MetTel acquired Thrive Networks.
- 2015: Rob Stephenson began consulting for Thrive Networks under MetTel's direction.
- 2016: M/C Partners acquired Thrive Networks and Corporate IT Solutions, and merged the businesses. The combined entity ultimately simplified its brand as Thrive. Stephenson, as CEO, runs the combined MSPs.
- 2017: Thrive acquired Precision IT in the financial services vertical.
- 2018: Thrive acquired InfoHedge Technologies in the financial services vertical, and BizCompass for New England expansion.
- 2019: Thrive acquired Tier1Net in the financial services vertical. Also, Thrive hired MSP entrepreneur Craig Guice as VP of business development in the Mid-Atlantic.
- 2021: Thrive acquired Apex IT Group.
- Present Day: Thrive announces successful recapitalization.
Thrive Recapitalization: Executive and Investor Perspectives
In a prepared statement about the recapitalization, Stephenson said:
“Thrive is proud to have built a company whose business model has been validated by a sophisticated technology services investor with a strong track record like Court Square. Our goal has always been to be viewed as a leader in the managed services space and this partnership will greatly benefit our existing customers, as well as provide an opportunity to expand our Cloud, Cybersecurity and ServiceNow-Powered Next Generation Managed Services Platform to new clientele.”
Added Jeff Vogel, managing partner at Court Square:
“Court Square is excited about the opportunity to partner with Thrive’s management team to continue to grow their managed services practice.”
Noted Matt Dennett, principal at Court Square:
“We’ve been actively pursuing an investment in this space for a long time and believe Thrive’s NextGen Platform provides a differentiated competitive edge in the marketplace."
Concluded Gillis Cashman, managing partner at M/C Partners:
“M/C remains a strong advocate of Thrive, its management team, business model and continued trajectory of success. We’re thrilled for the opportunity to carry on as investors and partner with Court Square Capital Partners in this next phase of growth.”
MSPs and ServiceNow Expertise
Meanwhile, an M&A feeding frenzy has started in the ServiceNow partner ecosystem -- an area where Thrive appears poised to focus more of its business efforts.
Demand for ServiceNow's software booming. The evidence: ServiceNow revenue was $1.25 billion in Q4 of 2020, up 31 percent from Q4 of 2019, the ITSM software company announced on January 27, 2021.
According to ChannelE2E's ongoing coverage, ServiceNow partner M&A deals that surfaced in January 2021 include:
- Private equity firm Sunstone Partners acquired and merged three ServiceNow partners to form the world’s “largest ServiceNow pure play partner. The acquired IT service management (ITSM) consulting companies are Evergreen Systems, Cerna Solutions, and Novo/Scale.
- Cognizant acquired ServiceNow partner Linium.
- Sapphire Systems, backed private equity firm Horizon Capital, acquired ITOM Solution.
- Milestone Technologies acquired Covestic.
It's important to note: ServiceNow doesn't specifically target midmarket and small business MSPs. But scores of MSPs are adopting the IT service management (ITSM) and workflow automation platform for their own use, and to introduce co-managed services with mid-market end customers that already run the ServiceNow platform.
Related: Track all ServiceNow Partner M&A deals here.
Thrive Recapitalization: MSP Financial Advisors
Multiple financial firms assisted the Thrive recapitalization process. Key names to know include:
- Drake Star Partners served as financial advisor to Thrive;
- Choate, Hall & Stewart LLP and the BRL Law Group served as legal counsel to Thrive;
- Raymond James and 7Mile Advisors served as financial advisors to Court Square Capital;
- Dechert LLP served as legal counsel to Court Square Capital;
- Alliance Bernstein provided financing for the transaction.
