This is M&A deal number 228 that ChannelE2E has covered so far in 2020. See the complete M&A deal list here.
Tech-Keys is backed by Evergreen Services Group, a private-equity funded organization. Evergreen has made 20 investments and acquisitions across the MSP market since January 2018.
Tech-Keys is based in Howell, New Jersey. Beringer, meanwhile, has a strong customer base across Southern New Jersey and Philadelphia, and has deep expertise in the distribution and manufacturing verticals. Moreover, Beringer ranks in the top 1 percent within Microsoft’s partner ecosystem, and has been Gold certified for more than 15 years.
The combined company has a stronger, larger footprint across New Jersey, coupled with a mix of cloud, managed and IT services.
Tech-Keys Acquires Beringer: Executive Perspectives
In a prepared statement about the deal, Tech-Keys CEO Michael Fried said:
“We are delighted to welcome Beringer into the Tech-Keys family. This acquisition represents another step in our vision to become the most trusted technology partner in the United States. Beringer has a strong reputation built on solving complex problems, providing excellent services, and treating each client as a true partner. Their top-tier technical expertise and amazing client support fit perfectly into Tech-Keys’ vision of providing best-in-class IT services.”
Added Ramsey Sahyoun, head of M&A at Evergreen Services Group:
“This marks our 20th MSP investment and we feel very fortunate that the Beringers chose Tech-Keys as the ideal home for their business. This deal also demonstrates our continued excitement about the MSP industry as a whole and our ability to complete acquisitions despite these challenging economic times.”
Concluded Craig Beringer, president of Beringer Technology Group:
“We are excited to join forces with Tech-Keys. We look forward to building on two and half decades of providing exceptional technology solutions paired with superior customer service & support. With Tech-Keys, we found the perfect partner that shares our vision, value, and culture. The Tech-Keys acquisition will fuel our growth and propel our services business forward for decades to come.”
This is Tech-Keys’ first acquisition since receiving an investment from Evergreen Services Group in October 2019. Tech-Keys is seeking to make more acquisitions — pursuing “companies that emphasize a culture of client success and employee development.”
Beringer Technology Group, meanwhile, also has M&A experience. The company acquired DeckerWright — a peer MSP in New Jersey — earlier this year. After the deal, Beringer’s overall workforce scaled to 35 employees.
MSP Mergers, Acquisitions and Valuations Amid Pandemic
When the coronavirus pandemic took hold of the U.S. economy in March 2020, Evergreen’s Sahyoun predicted quality MSP M&A deals would move forward. Still, he also suggested that the industry may be underestimating the pandemic’s overall business impact.
After a frantic shift to Work From Home (WFH) business models and associated IT projects, the MSP industry stabilized a bit in late April and early May.
During March through early May, MSP valuations for in-process deals held up well — though sellers typically received less cash up-front in exchange for extended earn-out opportunities, according to anecdotal evidence ChannelE2E has heard.
Still, MSP valuations may fall a bit in the second half of 2020 — as buyers and sellers both navigate the rough economy and associated business risks, ChannelE2E believes.
More MSP challenges may loom if the U.S. economy heads into an extended recession. Indeed, MSP and VAR revenues typically fall about 20% and 45%, respectively, during recessions, according to historic data analysis from Service Leadership Inc. (Note: Service Leadership is not predicting a recession, and provides the historic data as a point of reference for partners to formulate best-, mid- and worst-case scenarios for their businesses.)