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February 20, 2018
martinwolf  Transaction Analysis
ConvergeOne, Soon To Go Public, Acquires Arrow Electronics' Systems Integration Business

Financial Information*
  • Enterprise Value                                       ~$36M
Transaction Facts
  • Ahead of its imminent IPO, ConvergeOne announced last Thursday its agreement to acquire Arrow Systems Integration, a subsidiary of Arrow Electronics that specializes in unified communications, contact center, and voice and data technologies.
  • The deal is expected to close within 30 days of the announcement.
Gathering Speed Ahead of its IPO
  • New Chapter: On December 1, ConvergeOne announced it had entered into a definitive agreement with blank check company Forum Merger Corporation (Nasdaq: FMCI) to ultimately become listed on the Nasdaq Capital Market with an initial enterprise value of ~$1.2B. With regards to this development, on February 2, Forum announced the intent to transfer the listing of its common stock and warrants to the New York Stock Exchange from the Nasdaq following the combination's close. The company has previously stated its expectation to begin trading on the NYSE at the opening of the market as early as tomorrow, trading under the ticker symbol "CVON." 
  • Targeted GrowthConvergeOne, since being acquired by Clearlake Capital in June 2014, has expanded significantly through the strategy it knows best: M&A. In December, ConvergeOne acquired IT consulting group Alexander Open Systems, a Microsoft and Cisco Partner. Perhaps the most significant of its recent purchases was the $300M acquisition of SPS in August that catapulted the group into a billion-dollar company. The acquisition seems to have paid off, as ConvergeOne was named the 2017 Service Partner of the Year by Avaya just last month. (Cisco and Avaya together comprise ~60 percent of ConvergeOne's total product sales, while SPS has been a Premier Cisco partner and a Platinum Avaya partner). The purchase also advanced the company's strategy to hone in on managed services and cloud solutions while gaining substantial portfolio expansion. 
  • Successful Transition: John McKenna, Chairman and CEO of ConvergeOne since 2008, has transformed the company from a phone reseller to a unified communications giant. The seamless integration of acquired targets -- over 16 since 2005 -- helped establish ConvergeOne's status as a leading UC company with both a targeted geographical focus and a broad portfolio. As it maintains its M&A momentum, the company has invested more into the collaboration landscape with its C1CX offering, preparing to cater to a large client base as the migration to cloud accelerates. 
  • Mixed Results: Arrow Electronics acquired solution providers Cross Telecom and Shared Technologies on May 2011 and August 2010, respectively. While financial terms were not disclosed for either transactions, Cross reported ~$120M in sales in 2010 and Shared reported ~$252M in sales in 2009. Both transactions, which had a focus on UC and managed services, took Arrow into a different direction from its traditional two-tier distribution base.
For more information about this transaction,  click here to read the press release.

*Financial information from this CRN report

martinwolf was not the advisor in this transaction.

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About martinwolf    

With offices in the San Francisco Bay Area and New York, martinwolf is a leading M&A Advisory focused on middle market companies in the IT Services, IT Supply Chain, IT-Enabled Business Process Outsourcing and Software as a Service (SaaS) space. Since 1997, our team has completed more than 150 transactions in over 20 countries and sold seven divisions of Fortune 500 companies. 


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