Dive Brief:
- IT distributor ScanSource will acquire value-added reseller and managed service provider MicroAge in a $220.5 million all-cash transaction, the company announced in its earnings report for the quarter ended Jun. 30.
- The acquisition will close on Sept. 30, pending approvals, adding more than 2,400 U.S. customers and over 200 employees to the firm. ScanSource’s net sales grew 17.3% year over year to $953 million in fiscal year 2027 Q4, and 6.1% for the full fiscal year.
- The acquisition will bring a customer service and support organization to augment channel partners that lack one, according to ScanSource. “If MicroAge now can go to market with one of our agents, we believe the agent's going to win, and then we win because we own that MSP under MicroAge's banner,” ScanSource Chairman and CEO Mike Baur told Channel Dive in an interview.
Dive Insight:
Technology services distributors, such as ScanSource’s Intelisys unit, act as intermediaries between technology advisors and MSPs, connecting sales partners to supplier partners. ScanSource wants to own the MSP itself. That’s why it acquired MicroAge, according to executives.
“We'd have to resource it, so this is not going to happen on day one,” Baur said. “But we see the opportunity to introduce MicroAge to our TSD channel in a way that can help them do more than they're getting today from these existing suppliers.”
Baur added that the company does not intend to take business away from their existing suppliers.
The strategy lies in ScanSource’s decade-long attempt to cross-pollinate its two distinct partner bases and technology portfolios. The TAs in ScanSource’s Intelisys’ TSD business typically sell recurring cloud and carrier services in a commission-based model, while the partners in ScanSource’s specialty technology segment resell hardware for a one-time margin. Specialty partners are increasingly adopting the Intelisys model while Intelisys partners remain where they are, in part because resale requires higher financial and legal barriers than agency sales.
As a result, many TAs have turned to other partners to sell hardware and provide professional services. Rather than capitalizing on equipment leads themselves, some TAs toss them to referral partners and take a finder’s fee for the introduction. They may also give leads to MSPs and VARs that work with Intelisys as vendors. However, much of the revenue strategic partners generate from hardware and professional services bypasses both the TA and the distributor.
ScanSource aims to directly augment their partners’ service gaps through its acquisition of MicroAge.
“Most of our TAs don't have engineers sitting there waiting on phone calls or sales calls. They can't afford it,” Baur said. “We're going to rent these resources to the partners, and they only pay us if something closes. It's beautiful.”
There’s also an increasing share of consulting revenue up for grabs as TAs try to help their clients adopt AI. Many TAs in ScanSource’s base have leaned on vendors for AI expertise. Team members from MicroAge’s Octum.ai consulting business could fill that need.
“The agent says, ‘Let me introduce my partner MicroAge, and they're going to participate in an AI consultation with you,’” Baur said. “That's a great entry to ‘Oh, you're going to need some new servers and you're going to need some new devices.’”
The deal mirrors Scansource’s acquisition of TA business Resourcive in 2024. Both companies reach the end customer — a major shift in strategy from ScanSource’s policy of maintaining distance from the end user. Baur said it makes more sense now for distributors to directly interface with a customer, citing findings from Channel Dive sister company Omdia that the average customer works with 6.3 different partners
“If any of our partners feel like there's some channel conflict with their customers, we're going to do our best to make sure we prefer our existing channel partner if they're already in an account and MicroAge shows up,” Baur told investors in an earnings call Thursday.
Joe Rittenhouse, CEO of ScanSource partner Converged Technology Professionals, said recent consolidation of channel companies reflects how partner value models are changing. The move signals a push toward services and integration, according to Rittenhouse.
"Post-pandemic, buyer behaviors have matured faster than the agency model,” Rittenhouse told Channel Dive in an email statement. “Customers have become better at sourcing on their own, and the value of an agency comparison matrix and an ROI calculator went down with it. What is needed now is a partner who can integrate, implement and run the thing post deployment independent of the vendors.”
