IT Infrastructure Heats Up
While the two biggest acquisitions of Perot Systems and ACS were by strategic buyers, Platinum Equity purchased the much smaller Pomeroy IT which supports infrastructure as well. For Dell, Perot Systems provides a needed boost into their services business while taking advantage of Dell’s core product lines to deploy more advanced hosted or cloud offerings. Xerox will use ACS to expand out of their traditional product business and into corporate solutions, thereby expanding their market. The strategic buyers created adjacencies and bought cash flow from a stable, but lower growth market. What is the allure for Private Equity in a lower growth market? First, infrastructure services can be utilized by other companies already in the portfolio. While they could not create a shared services organization due to disentanglement issues upon divestiture, core services could be attractively bundled on an individual contract basis. Secondly, IT Infrastructure companies can be used in a broader roll up or platform strategy if the sector continues to consolidate as the use of managed services increases within enterprises. Regardless of the reason, IT Infrastructure is currently at the top of the conversation.
