What It Means to Master an Agency

Peter : On Rad's Radar?
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

What It Means to Master an Agency


After rumors swirled at CP Expo in Vegas in March, the announcement is finally here: Sandler Partners is acquiring X4. This will create an entity that is doing $65M in revenue, referenced as second only to one master agency.

It is interested that some media call it a master agency, when in the press release, Sandler Partners described themselves as America's Fastest Growing Distributor Of Connectivity & Cloud Services. X4 is called a master agency though.

I asked around about the term Master Agency. Regional organizations definitely use that term. Telarus does a ton of SEO around the term "master agent". In fact, until recently, they hosted a community on TMC around that term (see here; available now*). However, they also describe themselves as a value added distributor and offer circuit monitoring.

  • MicroCorp is the Premier Value Added Distributor of Telecom and Cloud Services.
  • COLOTRAQ is the only master agency purely focused on Data Center Infrastructure.
  • GCN recently coined the term Connectivity Integrator
  • PC Connections says they are an MSP.
  • TBI is a third-party technology distributor
  • AVANT is the premier distributor of next generation IT technologies and also the leader in channel sales enablement of next-generation IT technologies.
  • Acuity Technologies is a master agency with a managed services arm.

No wonder vendors are chasing Jenne, SYNNEX, Tech Data and Ingram. If the masters are now just VADs, they might as well chase big VADs.

Just to offer how Jenne describes itself: "Jenne, Inc., a value added distributor of technology products and solutions focusing on voice, video, data networking, premises security and the cloud."

I have said that masters would slam into the VAD wall soon. Just the share size of the product catalog would mean that they would have to start looking at the VAD model. Plus business model wise, they are similar with both being driven by vendor co-marketing dollars and margins.

The big difference between the VADs that distribute hardware traditionally and the VADs that were slinging T1s traditionally is one of Demand. The bigger vendors - Cisco, IBM, HP - create demand that the VADs distribute. They are a logistics business for boxes and software licenses. As we move to an As-a-Service model for everything (including hardware and Microsoft Surface), delivery and logistics change immensely as the price per sale drops (from one-time with maintenance to MRR).

Masters have some vendors with true demand - cablecos and the big 4 LECs, but for everything else they expect the demand to be created by the channel partner. That didn't work for the number 2 and number 3 power backup companies behind APC.

It didn't work for Juniper or Foundry. They had to create demand by building a better devices and offering training.

VMWare doesn't leave it up to the channel for demand. They brand, market, advertise and work the channel. There's a lesson there for the next level providers.

I am told that there will more mergers like Sandler-X4 coming. I don't doubt it. Many traditional masters are ready for retirement. Some don't want to be bothered with this cloud craze. Others are looking for scale to wield some leverage with the vendors.

This is the first acquisition for Sandler Partners. X4 is geographically distant. It will be interesting to see how that factors into the success of this transaction.

A branding expert writes "study after study puts the failure rate of most M&A deals at a stunning 70-90%.... The most common reasons for failure: people, politics and a failure to drive "buy-in" and alignment of all stakeholders." Culture and Buy-in of ALL employees will be factors in success.

No layoffs are pending, but a deal of this magnitude can't work without "Synergies", which is the banker code for layoffs. Curt Allen of X4 is staying on as President but the other 3 co-founders of X4 are not staying after integration. There will attrition with employees that don't buy-in, I suppose.

Sandler Partners now has a combined 40 channel managers and 140 direct vendor relationships.

Stay tuned.

* Yes that was a blatant plug but this blog is on the TMC webiste and the keyword is available. Email me or Anthony Graffeo for more information about a TMC community and content marketing.

BTW, if you want to get in on the discussion, check out LinkedIn HERE.

Related Articles to 'What It Means to Master an Agency'
Featured Events