A friend of mine and his partner sold their business intelligence software company, e.bi, to UXC last year. He recently bumped into another mutual friend at the company's annual kick-off event. She'd been working as an information technology infrastructure library [ITIL] consultant with Lucid IT when it too was acquired by UXC earlier this month.
Although they both worked in IT, I would have given pretty long odds on them ever being at the same company because they have very different and highly specialised skills. Obviously a bet I would have lost.
The long talked about industry consolidation trend has really started to gather some momentum in the past year or two, with UXC one of the most prolific players. In addition to Lucid, the listed integrator has already gobbled up the Australian arm of Getronics and Victorian SAP specialist, Intacct Business Consulting, since the start of the year. A fourth deal is expected to drop any time now and might even have been announced by the time you're reading this.
Unlike some other companies I could mention, UXC seems to have a very simple and effective acquisition model - buy a profitable company, leave the people who have made it profitable in charge and provide them with the resources they need to continue growing.
Like good Italian food, the best recipes are often the most simple.
I had a completely unrelated meeting with the co-CEO of Red Rock Consulting last week, Jonathan Rubinsztein, and was talking to him about the spate of acquisitions. He was one of four Red Rock directors when the company was bought by UXC four years ago and the business has flourished. Red Rock was already one of the largest Oracle resellers in the Australian market; now it claims to be the biggest by some distance and, despite the acquisition, has retained its identity as a young and trendy company.
One thing Rubinsztein has noticed recently is that being part of a larger group has opened doors that might have been closed in the past. Red Rock had been able to win its fair share of business as a niche integrator but has gained additional credibility from having a larger organization standing behind it.
It can help to establish trust with a potential new customer when another company from the same group is looking after another part of their IT infrastructure.
Despite the federated model employed by UXC, Rubinsztein noted an increase in the amount of cross-selling opportunities being driven through the various business units. Resellers and integrators working together on different parts of the same deal is a growing trend in the industry and forming those relationships must be a whole lot easier when you are both part of the same group of companies. For those who continue to build those partnerships individually, the synergies that are discovered along the way are likely to continue fuelling merger and acquisitions for the foreseeable future.