ScanSource to acquire Intelisys

Company looks to enter telecom and cloud services market
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Wednesday, August 10, 2016

GREENVILLE, S.C.—ScanSource, Inc., a global provider of technology products and solutions based here, has entered into a definitive agreement to acquire Intelisys Communications, Inc., a technology services distributor of business telecommunications and cloud services, for about $83.6 million.

ScanSource CEO Mike Baur told Security Systems News that the acquisition of Intelisys allows ScanSource to broaden its capabilities by entering the telecom and cloud services market.

“We believe the growth in the services space is coming in a massive way,” said Baur. “The acceleration is happening right now and our goal is to find markets that are underserved and would be well served by the channel.”

Under the agreement, the all-cash transaction includes an initial purchase price of approximately $83.6 million, plus earn-out payments based on earnings before interest expense, taxes, depreciation and amortization (EBITDA) over the next four years. The acquisition is expected to close before Oct. 1, subject to the satisfaction of customary closing conditions and receipt of regulatory approvals. Prior to the close, ScanSource and Intelisys will continue to operate as independent companies.

“Intelisys has been helping to drive adoption of VARs moving into the recurring revenue space through initiatives such as CloudServicesUniversity.com, an online education portal for partners, so that they can make that pivot to offering cloud and connectivity solutions,” said Baur. “They are a leader in the services space and we both agree that selling the solution is key. If we can create opportunities for both the VAR and the agent, it’s a win for everybody.”

With 2015 gross commissions of $120 million, Intelisys distributes services for the world’s leading telecom carriers, cable companies, cloud services providers and technology partners through the channel’s top producing sales partners.

Baur said that as opportunities in the cloud continue to emerge, “it’s important that we find a way to help our partners transition to these as-a-service offerings, so that when they are ready to move to a recurring revenue model, we can make it easier for them,” he explained.

He said that Intelisys is an ideal partner as ScanSource looks to develop a robust recurring revenue strategy for its partners.

“Consider a video surveillance solution for security dealers. Today, they are selling the hardware and software to their end user, but are they selling the connectivity of the solution?” said Baur. “If not, they are walking by a huge opportunity. We want to start the process of creating the channel of the future that can sell both services and products. This will make the channel much more profitable over the long-term. It’s all about providing the total solution.”