In another twist to the mindSHIFT saga, Best Buy has reached an agreement to sell the managed service provider company it acquired back in 2011 to Ricoh. Terms of the deal were not announced but the acquisition is expected to close in February 2014.
Analysis
There are two aspects to this story that are interesting. The first is the reason Best Buy acquired mindSHIFT. When the deal was first announced, it represented one of the biggest acquisitions of a known MSP by another well known buyer, in this case Best Buy. The fact that a company as well known as Best Buy was acquiring a MSP at all brought a great deal of spotlight into our profession.
After the buzz around the deal subsided, attention turned to motives and plans; just what did Best Buy intend to do with a MSP practice that was clearly not “Geed Squad” compatible. The news we heard was that Best Buy intended to use mindSHIFT to sell a SMB grade managed service offering to local businesses, sold via the electronic chain’s branch stores. Obviously, this never materialized, or at least not in the way Best Buy had anticipated.
Why Ricoh?
The next question hinges on reasons Ricoh would want to buy a MSP such as mindSHIFT. This is more obvious: to prevent the managed services gap from widening between itself and competitors like Konica Minolta. Print and office products manufacturer Konica Minolta, despite the stated importance of things like managed print services, saw the allure of adding deeper range (and higher margin) managed services. Put two and two together and the result is “go out and acquire a MSP to get us that capability.” Konica acquired MSP All Covered and the rest is history.
Ricoh’s motives for buying mindSHIFT may be different from Konica’s but let’s assume it is not. You now have two print/office product manufacturers who have both acquired MSPs with nationwide service delivery footprints. It doesn’t take a lot to figure out that these two hardware companies see great value in having managed services capabilities to sell in addition to their hardware product lines.
We should all watch out for what this purchase does to the Konica-All Covered camp and should they respond, how. I’ll be writing more about the reasons Best Buy’s tenure with mindSHIFT was so short and why it ultimately did not work out. In the meantime, however, 2014 just saw its first major M&A transaction in managed services and I think it won’t be the last.