NEXTGEN is one of various Australian and New Zealand (ANZ) IT channel companies targeted recently for acquisition or funding by overseas organisations.
In recent months, the likes of a US holding company, London-headquartered sustainability consultancy and a French electrical business have made headlines in the local IT channel.
Some deal advisory firms have talked up Australia as being well-positioned for international investment by companies looking for an Asia Pacific foothold.
“The multiples applied to Australian (and less the case New Zealand) IT/MSP/TSP companies has been generally a lot less than the international markets,” said Ryan Spillane, CEO of Sydney-based IT advisory firm 360 Consulting, “so it really was just a matter of time before the companies wanted to enter the market.”
“I feel the internationals are making a pretty big splash in getting into the market, the press they get around these acquisitions is smart and working well for them in that it’s ensuring more people contact them to consider deals,” Spillane told CRN Australia.
Spillane’s “gut feel is they are paying considerably more than the local market is or has historically paid, so this will allow them to get a good foot hold, but I can’t imagine they will want to continue to pay more than needed as that isn’t good long-term business.”
“The current unknown is when the other international players will enter the local market,” he added.
Here, we look back at some deals by foreign companies in the ANZ IT channel so far this year.
Exclusive Networks acquires NEXTGEN Group
In March 2024, Paris-headquartered Exclusive Networks announced the signing of a binding agreement to acquire Sydney-headquartered distributor NEXTGEN Group.
Exclusive Networks said the acquisition would double its ANZ presence and was key to its growth strategy in Asia Pacific.
It highlighted the region’s “attractive growth prospects and a total addressable market estimated at $10bn in 2023."
Founded in 2011, NEXTGEN has 190 employees across APAC and generated $266 million in gross sales during the 2023 financial year.
The company, which offers leading enterprise software and value-added cloud solutions, won the CRN Australia Emerging Innovator Impact Award in 2023.
Exclusive Networks stated NEXTGEN “presents a promising hyper growth vendor portfolio, coupled with a wide array of services.”
The company talked up NEXTGEN's expertise in cloud migration assessment, digital marketing and lead generation solutions, and said it plans to drive growth via its “state-of-the-art platforms and developed initiatives with hyperscalers.”
NEXTGEN’s founder and CEO John Walters said that “after 13 years of building [the] business from start-up,” its acquisition by Exclusive Networks “marks the start of an exciting new chapter in which our growth will be accelerated by the resources and expertise of a global cybersecurity leader.”
Evergreen Services Group snaps up Lancom Technology and Centrered
In January 2024, San-Francisco-based Evergreen Services Group made its first foray into ANZ with the acquisition of Auckland-headquartered MSP Lancom Technology.
Evergreen, which describes itself as a holding company, launched in 2017 with the backing of private equity firm Alpine Investors and has since acquired 75 IT businesses in the US, Canada, UK and ANZ.
In February, the company’s VP of M&A Sydney Hockett told CRN Australia that Evergreen planned to expand its ANZ presence in 2024.
“…we'll aim to do many more acquisitions this year and beyond. We've acquired Lancom, we have three others that we're currently in diligence with right now,” she said.
“So [we’re] ramping up our pipeline pretty fast [and] we would hope to finish 2024 with a good few more under our belt.”
The company made good on that plan in March 2024 with the acquisition of Canberra MSP Centrered.
Founded in 1996, the HP, Microsoft and Dicker Data partner has over 35 staff and boasts expertise in the not-for-profit sector.
Evergreen said the acquisition “provides access to Canberra’s thriving IT market” while giving Centrered “the ability to capitalise on Evergreen's global network and resources” and “expand into diverse new markets.”
Part of Evergreen’s value proposition for acquired entities is its hands-off approach.
“Unlike other private equity firms, we will retain your employees, invest in growth, maintain your culture, and remain flexible around your objectives and involvement following a transaction,” the company states on its website.
Spillane said “Evergreen’s public plan of acquiring companies and then letting them continue to run independently and generally by the previous owner is a great way to get into the market here.”
“It gives them time to acquire a solid number of companies while having a light local team.”
UK sustainability consultancy ERM buys Adelaide Salesforce specialist The Big Middle
London-headquartered sustainability consultancy ERM made a play to add ESG accounting and systems implementation capabilities with the acquisition of The Big Middle and The Big Zero in March 2024.
Established in 2022 by co-founder of the now Accenture-owned Oracle partner PrimeQ Andrew McAdams, The Big Middle is a Salesforce, Oracle and WalkMe partner that provides consulting and advisory, implementation and support services to mid-market customers.
Also founded in 2022, its sister company The Big Zero helps businesses achieve net zero and ESG goals with services covering implementation, managed services, Salesforce Net Zero, Scope 1, 2 and 3 reporting, and carbon accounting.
ERM’s global corporate sustainability and climate change co-head Matthew Klein noted the two firms’ “wealth of system implementation experience” and singled out The Big Zero’s ability to help its clients “better track and integrate environmental data seamlessly into their organisation.”
All 29 staff from the two firms were set to join ERM, which has over 8,000 employees in 40 countries.
FirstWave secures $2.5 million to fund Americas expansion
In March 2024, Danish asset management and financier Formue Nord A/S invested in an Australian company for the first time by entering into a convertible note agreement with ASX-listed software vendor FirstWave.
The deal netted FirstWave $2.5 million, which its CEO Danny Maher said “provides us with capital to pursue our plans to be a significant player in the global network management and cybersecurity space," which includes expanding into North and Latin America.
Formue Nord provides financing for small and mid-sized listed companies, focusing on technology, biotech and healthcare companies.
Since its founding in 2015 the company has invested over $2 billion into these segments and has completed over 800 investments and finance agreements with firms worldwide.
Formue Nord’s chief investment officer Rasmus Viggers said FirstWave presented “significant potential for growth” and that it intended “to be a long-term investor and partner” of the firm beyond the convertible note agreement.
Legrand Group buys New Zealand’s Mechanical Support Systems
In March 2024, French electrical and digital building infrastructure company Legrand Group purchased Auckland-based cable management solution firm Mechanical Support Systems (MSS).
The acquisition was not the first for Legrand in ANZ. In 2007, the company purchased Australian electrical switch and outlet manufacturer HPM – a deal that was first attempted in 1983 but vetoed by then foreign minister Paul Keating.
Established in 1904, Legrand has nearly 38,000 employees across 90 countries and delivers solutions including electrical installations, infrastructure management, power optimisation, structured cabling and lighting.
MSS, meanwhile, was founded in 2005 and designs, supplies and installs cable management solutions for businesses in the electrical and mechanical sectors.
Legrand said adding MSS’s cable management offerings “will enable us to offer more comprehensive solutions to growth sectors” including “the commercial, infrastructure and data centre verticals.”
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