ScanSource's buyout of Intelisys, confirmed this morning, was part of a careful ScanSource research project to pinpoint next-generation opportunities in the IT channel -- and then capitalize on those opportunities, according to executives who briefed ChannelE2E this morning.
During a conference call, ScanSource CEO Mike Baur, Intelisys President Jay Bradley and Intelisys Senior VP Andrew Pryfogle described the motivations behind the deal to ChannelE2E.
2013: Telco, VAR Convergence is Coming
Rewind to 2013. At the time, ScanSource's North American Communication team was investigating alternative ways for VARs to provide additional solutions in the market, recalls Baur. Among the key areas of intrigue: Potentially helping ScanSource's Polycom and ShoreTel partners to move deeper into recurring revenues.
At the time, ScanSource and Intelisys officials met in Canada at Polycom's worldwide partner conference, and the two sides began to kick around ideas on how the two companies could potentially work together, recalls Pryfogle -- who leads the Intelisys cloud transformation business.
Those early discussions triggered a partnership between ScanSource (strong in the VAR, reseller and IT hardware channel) and Intelisys (strong in the telecom agent channel, with growing cloud services momentum).
2015: Exploring Acquisition Targets
Fast forward to late 2015. At the time, ScanSource formed an internal skunkworks team to explore potential game-changing moves that would allow the company to do "something larger... something even bigger and better" for channel partners, recalls Baur. "We wanted to give VARs a way to move even faster towards the services and recurring revenue opportunity."
Skunkworks team members identified the telco and cloud services segment as a key area of opportunity, and included a shortlist of potential acquisitions. "As we looked at the potential targets for this effort, we had a list and Intelisys was at the top," says Baur. "It wasn't just based on size -- although they were the largest on the list."
Intelisys wasn't up for sale -- and that was precisely the point. "Intelisys wasn't being marketed as a company that wanted to be acquired," says Baur. "This is a typical ScanSource strategy. We don't look for companies that are for sale. To use a sports analogy, we find the best athlete and get them on our roster. And this was our first choice."
2016: Buyout Discussions
By early 2016, ScanSource reached out to Intelisys about a potential M&A deal. "We saw potential synergies right off the bat," says Intelisys' Bradley. "There's a huge opportunity to help ScanSource resellers . Plus, our cultures were vey much the same. They are very agile and progressive, and that's how we operate at Intelisys."
In recent weeks, representatives from both companies hammered out the official deal, which is expected to gain regulatory approval by the end of September 2016. Bradley has personally alerted the Intelisys partner base about the deal, and has already received more than 60 responses from partners cheering the combination. "Our partners want to learn best practices in the traditional IT hardware space, and ScanSource partners want to hear more about the Intelisys recurring revenue opportunities. They're all saying: 'Show us what's next.'"
So what is next? The answer involves three major conferences hosted by ScanSource and Intelisys, where the companies will share more details about their respective synergies going forward. Keep an eye on a major Intelisys partner gathering -- ChannelConnect -- set for Oct. 12-14 in Napa, California. On the flip side, ScanSource will host its 1Comm Partner Conference on Oct. 4-5 in Greenville, S.C., and the ScanSource POS and Barcode conference is Oct. 17-19 in Greenville, as well.
We'll be listening closely for developments at each conference.
