Ntiva’s acquisition of The Purple Guys is a landmark sale that one M&A expert is calling “a colossal move” in the MSP industry.
With now more than 800 combined employees and 2,000 clients across the U.S. M&A expert, John Holland, managing director of Corporate Finance Associates, called McLean, Va.-based Ntiva a “monstrous MSP.”
“It’s really a colossal deal and makes them one of the biggest MSPs in the country,” he told CRN. “Geographically it also makes sense.”
In bringing on Shreveport, La.-based The Purple Guys, Ntiva now has a stronger presence in the Mid-Atlantic, Southeast and Midwest regions as well as the South, with eyes on expanding their geographic footprint.
Financial terms of the deal were not disclosed.ADVERTISEMENT
[Related: M&A Expert: ‘There Will Be A Lot Of Private Equity Sales Of Businesses In The Near Future’]
Both The Purple Guys and Ntiva, which is on CRN’s 2024 Tech Elite 250 list, have been very acquisitive over the last few years. The Purple Guys, which was up until this point owned by investment firm Kian Capital, completed 10 acquisitions since 2020 and that acquisitive nature will continue.
“It is our aspiration and expectation to continue to grow via acquisition,” Christopher Vollmond-Carstens, chief M&A officer for Ntiva, told CRN. “We’re always looking for great businesses and great people to bring on board and join as part of our winning Ntiva story. We’re constantly on the lookout for great businesses and great people to partner up with.”
An acquisition of this magnitude may also be an indicator of a ramp-up in M&A throughout the IT services industry. During the COVID-19 pandemic, M&A skyrocketed in the industry and has since come down to pre-pandemic levels due to rising interest rates and macro-economic pressures.
In the U.S. alone, there were 383 IT service M&A deals in 2019, 392 in 2020, 612 in 2021, 620 in 2022 and 485 in 2023, according to Holland.
“I think it’s a very positive indicator that capital conditions are very robust and healthy, even in a higher interest rate environment,” said Holland. “There’s definitely pressure on private equity firms to sell the businesses that they’ve been holding for a little bit too long. This [sale] is a good sign that capital conditions are in a good position for M&A right now and as interest rates descend over the next year or two, that will accelerate M&A activity.”
It’s another indicator, he said, of “rapid consolidation” of MSPs that’s been taking place in the North American market.
“The Purple Guys was a roll-up of a lot of MSPs and Ntiva is kind of a roll-up of a lot of MSPs, and now with them buying The Purple Guys it makes them an even bigger roll up,” he said. “There’s really a lot of consolidation going on and I think it will continue. It’s a good sign for people who own MSPs, so keep growing those MSPs because there’s a healthy market out there and a lot of acquirers.”
He added that those growing MSPs are building more and more value as they’re adding more and more recurring revenue.
As for Ntiva, Vollmond-Carstens said the company acquired The Purple Guys for two reasons.
“[There are] cultural similarities between the two organizations,” he told CRN. “People first, and that’s clients as well as our staff, is at the forefront of our mind and forefront of our mission as we seek to build, grow and develop our respective companies. The second is the unique situation in that we are not in any overlapping markets. We have very complementary geographic markets so there’s no overlap to be concerned about. It’s just a perfect fit between the two sides.”
Leadership from The Purple Guys will stay on in the acquisition, as well as more than 280 team members.
“It’s something that we value very highly when it comes to combining forces with businesses,” he said. “The personnel element is critical because while we’re in a technology industry, ultimately this is about the people.”
And being one of the largest MSPs in the country comes with great responsibility.
“There’s excitement but also a reinvigorated responsibility to continue to deliver preeminent services and capabilities to our clients and continue to offer opportunities for growth, development and maturation of our collective staff,” he said. “The core mission of our combined business doesn’t change. It’s still focused on our clients, still focused on our people and we’re just thrilled that we’ve got an opportunity to do this across a broader audience here in the U.S.”