All Covered covering the US

Contact: Ben Kolada, Thejeswi Venkatesh

IT services shop All Covered has been on a steady M&A tear over the past year. Since its sale to Japanese consumer electronics giant Konica Minolta, announced in January 2011, All Covered has acquired nine complementary vendors throughout the United States. It’s expected to continue acquiring, but could see increased competition for its desired targets if M&A interest in this sector continues to rise.

All Covered is now the US expansion platform for Konica Minolta’s Business Services division. With funding from Konica Minolta (which has earmarked $500m for its Business Services group), the company has bought several IT services shops primarily for geographic expansion. Its dealmaking has expanded All Covered, which is based in Redwood City, California, into nine different states. So far, it’s taken a buckshot approach, casting a wide range rather than focusing on single market penetration. No two of its acquisitions have been in the same state.

However, its rapid M&A pace may slow if the IT systems integrator and professional services sector continues to attract interested acquirers, and if bidding competition increases as a result. M&A interest in this sector has risen dramatically since the bottom of the recession. According to The 451 M&A KnowledgeBase, deal volume in this sector last year nearly eclipsed the previous record set in 2006. (We’d note that while the majority of acquisitions are of systems integrators and IT professional services shops, purchases of email marketing and website design firms in particular are on the rise.)

Meanwhile, consolidation among IT services firms isn’t the only strategy playing out. Acquirers from all corners of the IT industry, as well as some non-tech shops, have made plays in this sector.

Acquisitions of IT services vendors

Year Deal volume
2011 633
2010 581
2009 478
2008 421
2007 577
2006 652

Source: The 451 M&A KnowledgeBase

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