Converge has acquired five solution providers over the last year, including Ottawa’s Northern Micro, and three in the U.S. They have secured a listing on the Toronto Venture Exchange through amalgamation with a shell company, and have an ambitious plan to expand, which includes many more acquisitions.
Converge Technology Solutions is looking to take the technology world by storm. The company has now gone public, launching on the TSX Venture Exchange [TSXV] after amalgamating with a shell company, Norwick Acquisition Corp., which had a listing. Converge has two guiding players, Shaun Maine, the CEO, and Gordon McMillan, the chairman of the board of directors of Converge, who were both among the founding group of Markham ON-based Pivot Technology Solutions in 2010. Converge’s objective is to create a large company by acquiring solution providers in the U.S. and Canada which are undercapitalized and lack scale, and combine them into a mutually supporting entity.
“The first solution provider they acquired was Corus 360 out of Atlanta, in October 2017,” said Lief Morin, President and CEO of KeyInfo, a Converge company based in Agoura Hills CA. “They then acquired two Ottawa companies, Northern Micro, and a small blockchain-focused consultancy – Becker-Carroll. We were the fourth acquisition, then BlueChipTek from the Bay Area, in May 2018. Those are the five companies acquired. After that, the focus shifted to ‘let’s go public.’
Bringing together regional solution provider players to create one stronger entity is a necessary strategy, Morin said.
“It’s a reflection of what’s happening in the marketplace,” he said. “To continue to be relevant and strategically of interest to clients, we have to scale. We have to develop a broader line of capabilities. The entire world of technology is undergoing disruption. A small regional VAR’s capabilities and relevance has already been eroded to larger players and hyperscale cloud organizations. The mission is clear – let’s join together, aggregate and disrupt. Look for 10 to 15 more acquisitions over the next 24 months.”
Morin emphasized that Converge is a company put together by technologists. Maine was the CTO of Pivot for six years, and is presently at the Cisco Partner Summit in Las Vegas, where on Tuesday Converge announced that they have achieved Cisco Gold Certification.
“This is absolutely not a private equity play to acquire companies in order to get a rate of return,” he said. “It’s people with a deep knowledge of industry who are forming a strategy to deliver services.”
Now that the company is public, their strategy to grow the business is once again the focus.
“It consists of two things: being acquisitive, and blending the skills of all the organizations together to create a dominant organization with a strong hybrid cloud focus,” Morin said. “By the end of 2020, we want to be doing $3 billion in sales.” That’s more than three times what any solution provider in Canada is doing, and clearly implies a significant number of acquisitions, as well as internal growth.
Morin said that while the five Converge companies retain their branding, they are not independent, or even acting as operating subsidiaries.
“We are focused on being part of a greater strategy,” he stated. “We are all executing in our own regions and territories, leveraging our local expertise in markets. There have already been extensive steps to integrate the offerings we all have, to share the resources of the other companies, to standardize our approaches and to deliver in a consistent format.
“Our first derivative is on-prem resell,” Morin continued. “That is where we all came from. But all the organizations acquired have also developed a second derivative, an additional tier of capability. Corus, for example, had a suite of cloud services. Northern Micro has an integration centre. We all have some kind of adjacency.”
The third derivative, Morin said, is for all the companies to leverage the capabilities of Becker-Carroll, who have developed a platform with the capability to build enterprise blockchain solutions.
“Becker-Carroll was a small consultancy but they are a leader in the blockchain space,” Morin said. “The question is how can we accelerate that. It’s all part of the common strategy of bringing things together into the market so that we can add true value in a way that none of the individual companies could have done it on their own. That is the real focus of our overall mission. We will combine our skills and capabilities. We will add on cloud services and bolster that and make it robust.”
Fully leveraging that cloud strategy – a multi-cloud strategy in particular – will be critical.
“Multi-cloud will be the hype cycle term of 2019, but even average sized companies today use 5-7-12 different cloud services,” Morin said. “That only compounds the challenges that used to be present in the four walls, and which sit on the CIO and CISO desk every day. We can differentiate because we have the skills and ability to deliver on-prem, in a community cloud or a hyperscale cloud seamlessly.”