CEO of Cisco integrator powerhouse Conscia claims that COVID-19 has accelerated his M&A strategy
Cisco integrator Conscia is on the verge of closing up to three more acquisitions in Europe following its buyout of Danish cybersecurity player Credocom.
Conscia this week announced its buyout of Credocom - a Denmark-based cybersecurity firm with roughly €25m in annual revenues and around 40 staff.
The firm specialises in firewall solutions and is the leading Palo Alto Networks partner in Denmark, according to Conscia CEO Claus Thorsgaard.
Speaking to Channel Partner Insight, Thorsgaard said that he is on the verge of closing another two or three acquisitions in Europe within a matter of weeks.
Although he could not give specific details, Thorsgaard said that the acquisitions will expand Conscia's footprint in the managed services and cloud spaces through acquisitions.
Acquiring into the managed services and cloud space will likely mean Cisco partner Consica will add new vendors to its line-up.
The CEO strssed that by adding Palo Alto to its vendor line up and making plans to move into the MSP space, Conscia is not shifting its focus away from its core Cisco business.
Thorsgaard explained that Conscia is adopting a "Cisco-plus" strategy - meaning Cisco will always be its most important partner, but that other technology partners could be brought into the equation to augment its core Cisco offerering - naming NetApp and VMware as potential vendors.
"We are not looking to acquire for networking partners that are competing with Cisco. We differentiate because we are best at Cisco, but in the Cisco ecosystem there are a number of technologies that will actually augment the solutions we sell to our customers.
Conscia, which has acquired nine firms over the last five years, has grown at a CAGR of 30 per cent since 2016.
The CEO said that the COVID-19 pandemic has accelerated its M&A strategy.
He said Cisco partners across Europe are struggling as a result of the pandemic, and are looking at Conscia as a potential lifeline for their business.
Meanwhile, Cisco has been incentivising partners to push more of their business through recurring revenue models over the last few years as it looks to transform itself into a hardware business.
Thorsgaard said that a combination of Cisco's shift to recurring revenues and the COVID pandemic is speeding up consolidation in Cisco's partner ranks.
"That is actually why we have seen our M&A activity going up over the last six to seven months. In our view, our market position is actually stronger today than it was pre-COVID. Of course it has not been a fun journey, but if you look at the competitive situation, we actually think we are strengthened from what has happened," he said.
"Some of our competitors have been forced to lay off people and we have managed to keep hold of the key talent. More and more smaller partners are looking at us and seeing that we have managed to grow… So obviously they also see the benefits in being part of a larger but not super large company that continues to grow"
Cisco's business has struggled amid the COVID-19 pandemic. Its Q4 results showed a nine per cent decline in revenues. The vendor also forecast its Q1 sales to decline between nine and 11 per cent year on year.
Cisco has been racked by a lack of customer demand for its hardware products and macroeconomic pressures during the COVID crisis.
But Thorgaard claimed that Conscia has in fact managed to take market share during the same time frame through its strong links with Cisco.
"We have a bigger and bigger portion of our revenue that is recurring so it is not hitting us as hard as it is hitting Cisco. And we're also still gaining market share. So even though Cisco is declining, there's still quite a lot of market share gains that we can do and continue to grow. We have a very strong partnership with Cisco. They realise that in northern Europe we are the partner with the most competence, the most certified. We definitely support each other and have been supporting each other through this situation," he said.
Thorsgaard said Conscia is looking to surpass €400m in revenue by the end of its next fiscal year ending 30 September 2021.
Creating a new cybersecurity division in Denmark
Following its acquisition of Credocom this week, Thorsgaard said he has big plans to build a new cybersecurity division in the Danish market.
Credocom's employees will join a newly formed division at Conscia called Conscia Security Solutions. Thorsgaard said he plans to close down Credocom's existing office just outside of Copenhagen within the next three or four months, with staff instead co-locating in Conscia's offices.
The cybersecurity firm's existing MD, Thomas Grønne, will lead the new division.