There's already been a lot of speculation about what impact Tech Data's $5.4bn deal with Apollo Global Management will have on the distributor and its partners.
CEO Rich Hume has claimed that Apollo will "afford Tech Data additional resources to accelerate our ability to bring to market the technology products and solutions the world needs to connect, grow and advance."
But the very recent history of distributors going into private ownership doesn't weigh in Tech Data's favour.
Ingram Micro's sale to Chinese conglomerate HNA back in 2016 was supposed to supercharge the distributor at a time when the industry was ripe for consolidation and open for one of several large players to take a leadership position.
Soon after the acquisition closed, Ingram's EMEA chief, Mark Snider, told CPI that "all acquisitions are on the table" now that Ingram was gifted the resources and financial clout of HNA, a company that manages $230bn-worth in assets.
But the biggest M&A move Ingram has made in the last three years under HNA ownership has been in Abbakan, a single-country security VAD from France with undisclosed revenues.
Now almost three years under HNA ownership, some would say that Ingram's fairy tale as a privately-owned company hasn't lived up to expectations.
HNA has run into huge debts over the last few years as part of an M&A binge which saw it snap up stakes in hotels, airports and skyscrapers across Europe and the US. Bloomberg reported that the Chinese firm had debts of $80bn as of June 2018.
Ingram is just the tip of a huge debt iceberg that HNA is trying to break down. It pledged to divest $25bn of assets at the beginning of 2018, with Ingram among those up for sale.
In fact, Apollo Global Management was reportedly sniffing around Ingram Micro less than a year ago, but clearly the deal didn't work out or it had second thoughts, and opted for Tech Data instead.
So judging from very recent history, going under private ownership hasn't gone in distribution's favour.
So should we see this as a bad omen for Tech Data? Obviously Tech Data's fortunes under private ownership could be entirely different.
Let's not forget that the smaller value-added players like Exclusive Networks, Infinigate and Nuvias are all seemingly thriving under private ownership. They've all managed to take on market share, make bold decisions, grow revenues and win over pan-EMEA or global distribution agreements from their competitors.
And even putting the obvious US-China complications implicit in the Ingram-HNA tie up aside, on the face of it, Apollo will prove a much safer pair of hands than HNA.
Apollo already has a track record of making a success out of channel firms. It currently owns global MSP Rackspace, which seems to have successfully pivoted from a cloud hoster that competed with Amazon, Microsoft and Google, to a fully-fledged MSP under Apollo's ownership.
Apollo is now reportedly planning to IPO Rackspace after initially acquiring it for $4.6bn in 2016.
And then there's Presidio; a mid-market Cisco partner from the US which Apollo acquired in 2014 and was then taken public in 2017. Although Presidio's IPO was met with a lukewarm reception, Apollo has been credited with bringing the firm back to profitability - from a $3.4m net loss in its fiscal 2016 to a $4.4m net profit in 2017.
Finally Apollo took another US firm - West Corp - off the NYSE exchange in 2017. Although not strictly a channel firm, more than half of its revenues stem from providing unified comms services.
Is Tech Data 'doing a Dell?'
We've previously heard from one high-level channel executive speculating that Tech Data could be following the example of Dell Technologies, which used its time under private ownership to make some huge organisational changes, such as acquiring EMC and VMware, before relisting again.
Private ownership allowed Dell Technologies to make some daring moves and take a longer-term view of the market - away from the pressures of delivering strong financials every quarter.
So can we expect Tech Data to do something similar?
For me, the answer is no. Tech Data has made its most defining and drastic moves even under public scrutiny. It entered into distribution's largest merger of all time when it acquired Avnet TS for $2.6bn in 2016. It has implemented a two-year optimisation programme to save $80m and cut ties with low-margin vendor partners worth around $300m in revenues each quarter.
So it's hard to imagine how Tech Data could be gearing up for any big, show-stopping moves under private ownership - because it's already done it, and its difficult to think what other big moves Tech Data could possibly make.
First Ingram, now Tech Data - will private ownership become the status quo for distribution?
OK - so the two biggest players in IT distribution will soon be privately owned. And what we've heard from industry experts such as Canalys' Steve Brazier and others is that large private equity firms are becoming more interested in the channel. Interest rates are low, says Brazier, so an investor is better off putting its money into a business like a distributor than keeping it in the bank.
And private equity is surely taking notice of the rising valuations of IT distributors. Let's look at ALSO from Switzerland, which has itself been hugely daring and acquisitive in Europe and has seen its share price rocket by 174 per cent in the last five years. Meanwhile Arrow Electronics has seen its share price rise by 40 per cent and Synnex has grown its share price by 66 per cent in the same time frame.
So in many ways, it's no wonder that distribution is becoming an attractive investment. The opportunity for consolidation,and the rising relevance of distributon in a cloud and software-driven world, could result in more distributors following suit with the industry's largest players.
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