Cold-call to client leads to solution provider merger

Douglas Gray

Graycon Group's Douglas Gray

It’s one of the most unique stories that ever led to a merger – one solution provider cold-calls another’s customer, and it leads directly to the two becoming one.

According to Douglas Gray, president and CEO of Calgary-based Graycon Group, it was a cold call from Kamloops-based Voda Computer Systems to Graycon client Lake Okanagan Resort that ultimately led to the two merging.

“I’m a big believer in Karma,” Gray said with a laugh. “Things happen because they’re meant to happen.”

The cold-call led to Voda getting in touch with Graycon, which led to a conversation between Gray and Voda chief Andrew Watson, which quickly led to the two coming together. “At the end of that first call, both of us saw the deal,” Gray said.

And while there are many reasons given for mergers and acquisitions, including expanding into new markets, adding adjacent skills or experiences, or accelerating growth, Gray offers a much simpler set of reasons for pulling the trigger on the merger with Voda.

“It’s fun and it felt right,” Gray said. “There’s no reason to do it if those two things aren’t there.”

Those are the dominant reasons for making the deal, but there are also some solid business motivations. For one, it gives Graycon an entrée into the British Columbia market, with Voda president Watson joining the company as manager of Graycon’s new BC region with locations in Kelowna and Kamloops. The BC operations join Graycon’s existing operations in Alberta (Calgary, Edmonton and Red Deer) and Saskatoon, Sask.

The new regions are also in keeping with one of Gray’s major motivations: “I love small markets,” he said, partially because competition amongst services-focused solution providers isn’t as heavy as it is in major markets. Already, he reports, Graycon is winning services business from legacy Voda customers in central BC that would have previously brought such skills in from Vancouver.

“There’s a lot of companies in the Okanagan Valley that can make use of us,” he said. “We think we have a lot of opportunity, and we will be the dominant player in that market.”

The two solution providers come at the world from slightly different viewpoints, and Gray said both sides would benefit from the combination.

Voda was more of a traditional VAR that was building out its services practice, while Graycon is focused on IT management, consulting, outsourcing and support. By taking on Graycon’s best practices and methodologies, Gray estimates they’ll be able to “save them three years of pain” in developing deeper services and expanding the types of solutions offered.

At the same time, the two companies have had product businesses of roughly the same size, but Voda’s overall smaller size and history as a more traditional VAR mean it has deeper expertise than Graycon when it comes to product procurement. Voda also enjoys closer, more active vendor relationships, Gray said, relationships that will benefit the combined businesses across the board.

The Graycon/Voda merger is just the latest in a round of solution provider M&A activity, largely centered on Western Canada. In January, Vancouver-based Fully Managed expanded into Edmonton via a merger with HIT Solutions; while more recently, Calgary-based Britec Computer Systems Group purchased London, Ont.-based MBCSolutions.

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