By: CJ FAIRFIELD

‘When it comes back to a M&A perspective, we look for a cultural fit and the right customer base that fits in with our own,’ says Mark Lee, UK president of Fulcrum IT Partners. 

After acquiring two companies so far this year, Fulcrum IT Partners has no plans of slowing down and says it plans to acquire four to six additional companies by the end of 2023.

“We do have a few that are ready to close,” Kelly Carter, chief strategy officer for Fulcrum IT Partners, told CRN. “If the right opportunities are there we have the ability to shift and make sure that we’re taking advantage of those opportunities while we can. For 2023, we’re looking at probably four to six additional on top of what we’ve already completed.”

Toronto-based Fulcrum IT Partners, which owns a host of other MSPs, is also expected to hit $1 billion in revenue by the end of 2023. The momentum is in part due to its latest acquisition streak over the past two years. In March and April, Fulcrum acquired Ohio-based Advizex and London-based MSP Viadex, respectively. In 2022 it added Canadian cybersecurity firm iOn United and Prodec Networks, and in 2021 it added UK reseller Pure Technology Group.

“It’s the sum of our acquisitions,” Carter said. “If you look at our go-forward strategy, it’s really the cross-sell synergies that will drive that growth exponentially, as well as continued acquisition activity.”

The company has the largest presence in the US, UK and Canada but has the capabilities to operate in 58 other countries.

“We have a portfolio of services today that we deliver to customers that are referenceable and repeatable and that we’re now very focused on taking to the broader group,” Mark Lee, UK president of Fulcrum, told CRN. “Much of the footprint of those services at the moment is UK based and we are proactively developing that into the US, Canada and into Germany as well, where we also have group presence. But that portfolio of services that we branded specifically to take to a global market will evolve.”

He said the Fulcrum team has created a roadmap that has a strategy to fill some of the gaps through acquisitions, “and then some of the capability we will continue to build ourselves.”

The company is also very focused on verticals, which remains a top priority when looking at companies to acquire.

CRN spoke with both Carter and Lee about Fulcrum’s acquisition strategy, where the company sees the most revenue growth and what makes them better than the competition.

When looking at acquiring a company, what makes that company attractive to Fulcrum?

Carter: It’s definitely the capabilities and where we see the opportunities. That’s what we’re targeting for our acquisitions, the companies can that can help us on that journey and have those complementary capabilities to fill in the gaps. That’s why Mark is so critical to Fulcrum. He’s leading the outcome-based services and managed services. A lot of that is building the right solution stacks for our customers, so the more capabilities we have to make a full solution, the better.

Lee: A lot of the capabilities already reside inside the organization through acquisition. If we can find companies that have capabilities that are complementary to what we do and/or fills a gap, that’s certainly where we’d be very interested. Whether that’s on a very small scale, or subscale or whether it’s a lot more developed if it builds out our capability overall that’s what we target.

What is Fulcrum’s overall M&A strategy?

Carter: The strategy is we want to build a company very quickly with a strong global footprint to be able to deliver solutions globally. The focus is on our customer outcomes and bringing in all the service capabilities, as well as the vertical focus. We do want to make sure that we’re experts in certain verticals, and that’s where we’re looking to bring in companies that help strengthen that.

Lee: What’s critical to us is that we’re building solutions that solve customer problems that are outcome based in the way in which we deliver them. We’ll always go after companies that enable us to add that value and help us differentiate our offering within the marketplace, be that from a technical perspective or a commercial perspective. The other piece I’d add is that all of our services are very much focused on the midmarket. We’re very focused on providing midmarket organizations with solutions that they find difficult, too complex or too resource intensive to deliver themselves. When it comes back to a M&A perspective, we look for a cultural fit and the right customer base that fits in with our own.

What aspect of the business would you say is growing the fastest?

Lee: I would say the area that we see the most potential for growth is in the cloud managed services. That’s certainly where we see the most potential. We look at tailwinds in the industry such as digital transformation, and Fulcrum has some branded offerings that support organizations on their digital transformation journey. We look at areas that are proliferating within the industry [such as] the move to SaaS and cloud adoption, which is very aggressive, particularly in the US at the moment. We look at the proliferation of mobile apps and hybrid work post COVID. Then we look at cybersecurity and we’re rapidly developing and investing in a range of cloud-based cybersecurity solutions which address customer needs in that space too.

How does Fulcrum differentiate itself from the competition?

Lee: We’ll integrate technologies from multiple vendors and we’re very much focused on creating better customer outcomes as a result of that. We do that by leveraging group capabilities. We’ve got a very diverse capability as an organization and we’ll apply our own proprietary technical expertise to differentiate. Most of the time, particularly with some of our cloud managed service offerings, we came up against the vendor propositions. A vendor might specify that a partner delivers something in a certain way, typically based on deployment of all their own technology, we take a bit of a different step. We take best of breed and we aggregate solution on that basis. That gives the customer a better outcome in that they’re not forced down a particular route, which can often end up being very expensive. Sometimes that means that the customer won’t do anything. We’re trying to smooth that journey for them, enable organizations to get best of breed technology and integrate all of that in the middle. That’s something that, particularly in that midmarket space, they wouldn’t be able to achieve themselves.

What does Fulcrum’s M&A strategy look like over the next two years?

Carter: The plan is continued and accelerated growth. As we build up Fulcrum, we’re going to see where those opportunities are for the future. We’re really looking to capitalize on where those opportunities are in the market, and make sure that we’re ahead of it.

Are there any segments you’re looking to get into in the future?  

Lee: I would say one of the key areas is around cybersecurity. The suite of services that we built and will continue to develop will continue to be increasingly focused around cybersecurity propositions to customers. It’s an area of the market that is growing. We work with customers to help reduce complexity and to free up resources. I think we’ll see some real developments in that space and there’s some real market differentiation coming down the line. What we will do as a managed service provider is begin to introduce cyber warranties to underpin our technology deployment.

AI will become part of the platform as we build out, develop and evolve our cybersecurity cloud services proposition. We will begin to put ourselves in a position where we can aggregate more data than probably anyone else can as opposed to a vendor. When we begin to aggregate that data, then the application of analytics and machine learning actually put us in a really preferential position. We can make data driven decisions ourselves, we can enable data driven decisions for our customers, and because we have very significant alignment with the insurance industry, we can use that data to give better outcomes not only to end users but to insurers, so it’s a win-win for everybody.

Link to CRN Article