BitTitan talks with ChannelBuzz about their M&A strategy, what types of companies might be on their radar, and why they are confident that they can turn the right underperformer around.
Barney Silver, BitTitan’s vice president of finance and operations
Managed services automation provider BitTitan has built up their business over the last decade completely organically, and has never acquired another company. The plan is to change that however. Last summer they secured financing to facilitate a strategic acquisition strategy. Now, they have announced the hiring of M&A expert Kirk Swanson as corporate development associate, a net-new position for the company, to help bring the right company or companies into the fold.
That BitTitan has never made an acquisition is unsurprising considering that they were entirely supported financially by founder and CEO Geeman Yip.
“BitTitan is different from most other companies because Geeman started it out of his house and truly bootstrapped it,” said Barney Silver, BitTitan’s vice president of finance and operations. “BitTitan was built one customer at a time, using the channel and delivering value to MSPs. The company has a 10-year track record of success, and has grown and scaled to the point where we can think about more than organic growth. We can build some things ourselves – but we can’t build or do everything.”
BitTitan got the ball rolling on this M&A initiative last July, when they announced they had secured additional growth capital from Vancouver-based Vistara Capital Partners, with acquisitions being a key priority here.
“We want to take advantage of Vistara’s investment in us, and that’s why we hired Kirk and his experience in investment opportunities,” Silver said.
Swanson comes out of the investment banking space rather than IT. He spent nearly five years at D.A. Davidson & Co. in Seattle, the largest full-service investment firm headquartered in the Northwest, where he was an associate in the investment banking group, advising on mergers and acquisitions.
Silver said that BitTitan is ideally positioned to take an IT company that has been underperforming and ramp up its sales.
“In the world of corporate sales, there are two types of buyers – financial buyers and strategic buyers, of which BitTitan is one of the latter,” he stated. “They can do some things that financial buyers cannot do. There are some very interesting companies out there with good products, but which have had fairly modest sales. A financial buyer can’t really do anything with them but give them money to try and grow their business. We have 41,000 customers in virtually every country [187] in the world, so we can push a product globally very quickly with our distribution network, and offer it to a huge array of customers.”
Silver indicated some of the principles behind BitTitan’s acquisition strategy.
“We are not particularly interested in buying any of our competitors,” he said. “We think we have the best product in the market, so we wouldn’t gain anything by buying a direct competitor. We are much more interested in extending our offerings to things we don’t currently do.”
Such companies might or might not already be selling through channel partners.
“Whether or not they have an existing channel strategy is not a first-tier criteria,” Silver indicated.
On the other hand, products developed in-house by MSPs could well be a target.
“That is absolutely something that we would look it,” Silver said. “We are 100% SaaS, and don’t want to do any professional services, so we don’t want to acquire that kind of company. But if such a company has a product they haven’t figured out how to monetize, that would be something we would be interested in.”
Kirk Swanson, corporate development associate, BitTitan
BitTitan is aggressively advertising that it is open for business, and looking to acquire.
“I’ve spent the past five years living and breathing M&A, and this announcing our intention – making it known that we are looking for acquisitions – is fairly common,” Swanson said. At Davidson, we put together buyers’ lists for clients who are selling. They will know we are looking for acquisitions, and will be on their radar.”
Swanson said that BitTitan isn’t overly concerned about having to wade through dud companies that they would never want to buy, but who are eager to have someone buy them.
“We will get some non-performing companies showing interest in being acquired, which is why we had to expand our team, to expand our bandwidth,” he said. “This is the best way though, to look for a diamond in the rough, however. You can find great people in the pile.”
Silver said that there’s no timeframe on bringing an acquisition.
“We would like to do it as soon as we can, but we want to do the right deal and buy the right company,” he said. “We hired Kirk eight weeks ago, and I hope he works here for 10 years. This is not about a quick hit. It’s a programmatic approach. It’s unlikely we would be making a big announcement by the summer, but it could be the end of the year, or the first quarter of next year. It takes time to do it properly.”
