Converge Technology Emerges As Reseller Powerhouse
December 2, 2019 Alex Woodie
Here’s a computer company you may not have heard about: Converge Technology Solutions. Over the past two years, the publicly traded Toronto, Canada-based company has completed numerous acquisitions of value added resellers (VARs) and private cloud providers that ply the IBM Power Systems waters – including Key Information Systems, Corus360, and Essex Technology Group, to name a few – and there’s no reason to think it will stop in 2020.
Converge Technology Solutions was founded in 2017, when it began executing its goal to acquire a number of smaller VARs and consolidate the “fragmented” reseller landscape, according to chief executive officer Shaun Maine. “What if we were to buy regionally focused players, who don’t have the size and scale but are winning on the technology and service levels of their business?” Maine said in a story that appears on the Converge website. “We then turn a traditional VAR into a more hybrid IT provider.”
As the former chief operating officer of Pivot Technology Solutions, Maine is a natural fit for this job. While he was at Pivot, the Toronto-based company executed a similar strategy of acquiring and integrating regional VARs, including ACS, ProSys, Sigma, and Teramach. Before he left, Pivot had revenues of $1.5 billion. Now it appears that Maine is replicating that strategy to some extent at Converge, albeit with a different cast of characters.
Converge kicked off the acquisition binge soon after its founding in October 2017, when it acquired Corus360, a VAR and managed services provider (MSP) based in Atlanta, Georgia. Corus360 offered a range of disaster recovery (DR) solutions for a range of server platforms (including IBM i) through its RES-Q division. And several years ago, it got into the cloud hosting business with the launch of its PowerCloud360 offering. The company continues to host customers solutions in its SOC data center under Converge’s ownership.
In November 2017, Converge bought Northern Micro, a technology solutions provider based in Ottawa, Canada. Like many VARs, Northern Micro, which was founded in 1985 by Herman Yeh, sells technology from a number of providers, including IBM, HPE, Dell EMC, Cisco, and Microsoft. Under Converge’s ownership, Northern Micro today employs 65 people across three locations in Canada.
It was back to the capital of Canada in February 2018, when Converge wheeled and dealed for Becker-Carroll, an Ottawa-based provider of solutions in the areas of blockchain, privacy, access and identity management. The company has done extensive work with the Digital ID and Authentication Council of Canada (DIACC) and in fact was awarded a contract with the group following the acquisition by Converge.
In April 2018, Converge acquired Key Information Systems, a Power Systems VAR based in Southern California that has been active in the IBM i midrange space for decades. In announcing the acquisition, Maine said the deal “fulfills the West Coast phase of our build-out of a national platform of regionally-focused IT infrastructure firms . . . .”
Six months later, Converge was at it again with the acquisition of Essex Technology Group of Rochelle Park, New Jersey, its sixth acquisition. Essextec was an IBM-focused VAR that had parlayed its expertise in Power Systems, Pure Systems, and IBM storage into the emerging cloud and cognitive markets when Converge swooped in and acquired it.
In December 2018, Converge acquired Lighthouse Computer Services, a Lincoln, Rhode Island-based provider of IT solutions. Lighthouse was active in IBM and Microsoft channels, and offered solutions in areas related to analytics, cloud, and security, among others. Seven months later, Converge would promote Lighthouses’ CEO Greg Berard to the position of president of Converge.
In January of this year, Converge acquired the assets of Software Information Systems, or SIS, from VBS Holding Company, whose owners included the management team of SIS. Based in Lexington, Kentucky, SIS sells IT solutions that run on-prem and in the cloud. In the IBM i space, it was active in implementing DR and high availability (HA) solutions. In recent years, it has moved strongly to the cloud, as have many midrange VARs.
Also in January, Converge announced that it was committing itself to focusing primarily on IBM systems and technologies. “With the recent acquisition of several of IBM’s highly-skilled partners, Converge is well positioned to drive the next wave of innovation in the market,” Dorothy Copeland, vice president of IBM Global Business Partners in North America, said in a press release. “We look forward to growing our business together with Converge.” (Two weeks later, Converge announced that it had achieved Gold partner tier status with Dell/EMC.)
In March, Converge announced that it had obtained a listing on the Frankfurt Stock Exchange, and commenced trading under the ticker symbol 0ZB. Two months later, Converge announced that its common shares had begun trading on the OTCQX Best Market exchange under the ticker symbol CTSDF. The company also is traded on the Toronto Stock Exchange (TSX) Venture Exchange under the symbol CTS.
Converge bought Nordisk Systems in July. Since it was founded in 1983, the Portland, Oregon-based company had been providing customers in various industries with IT solutions running atop IBM i, AIX, Linux, and Windows. While it maintains affiliations with many OEMs, Nordisk lately had been active in the market for Cisco UCS systems.
Two months ago, Converge nabbed Datatrend Technologies, an IT solutions firm based in Minnetonka, Minnesota. Datatrend sold systems from all the regular suspects, including IBM, and had about 60 employees, according to Bloomberg.
Last month, Converge completed its latest acquisition: VSS Holdings, an IT solutions firm with 10 locations from Denver to New York City. Like with most acquisitions, Converge announced that VSS’ executive leadership – in this case former VSS CEO Robert Jernoske, Jr. – would continue to lead the division under Converge.
Also last month, Converge announced its financial results for the third quarter of 2019, in which it brought in revenue of $144.5 million Canadian. That was a significant increase from the same quarter in 2018, when it brought in an even $100 million CAD. What’s notable is that nearly 13 percent of the revenue was of the recurring type from its cloud and MSP business, which Maine highlighted as an encouraging sign.
In addition to the acquisitions listed here, Converge has made two other acquisitions that do not appear in its chronological list of press releases that began with the Corus360 acquisition back in October 2017, including 10084182 Canada Inc. and BlueChip Tek. All told, the company says it has made 11 acquisitions in just over two years, and has become one of IBM’s biggest partners. Judging from Maine’s past success at Pivot, there’s no reason to think Converge won’t continue to be active on the M&A front in 2020.