IT distributors take reverse logistics in-house via M&A

Contact: Brian Satterfield

In order to reduce their reliance on third-party providers of equipment refurbishing, recycling and disposal, some of the world’s largest IT product distributors have been turning to M&A to strengthen their own end-of-lifecycle capabilities.

In the past three years, product distributors have represented the buyers in nearly one-third of the transactions in the IT equipment and disposal sector. In the past few months alone, we’ve seen an uptick in this trend, with five deals since last December in what is usually a rather quiet area of tech M&A. In late February, Arrow Electronics purchased IT disposal and recycling firm Asset Recovery Corp, a little more than one month after acquiring a similar Austin, Texas-based company called TechTurn. In both cases, Arrow noted its need to bolster its capabilities in areas that are complementary to its primary business model.

Avnet, the world’s largest IT products distributor, also got in on the action with two recent lifecycle management-related acquisitions. On the final day of January, Avnet bought Platinum Equity-owned Canvas Systems, which has a strong refurbishing side business in addition to its primary distribution activities. And in mid-December, Avnet reached for ROUND2, a pure-play IT asset disposition company.

Still, not all well-known tech distributors have dipped their toes into M&A in the sector. Ingram Micro and SYNNEX, for example, have both been absent from the activity despite making relatively frequent buys into other sectors. One IT asset recovery company that has attracted some attention from big vendors in the past is Apto Solutions, an 11-year-old firm based in Atlanta.