MicroCorp Wants Acquisitions, But Not Just Anybody

You may have seen the email promising to protect, diversify, add value, and even retire all with a single phone call.” Its from master agency MicroCorp, which appears to be taking a leap as the telecom industry outgrows the legacy mindset; in response, the Georgia-based company wants to buy the customer bases of small master agencies, systems integrators and interconnects with carrier-services businesses, to expand its own possibilities. In fact, one deal already is in the works. MicroCorp sees its future in cloud computing, managed services and, overall, a consultative approach.

Its a good way to grow beyond just growing organically,” said Brad Miehl, president and CEO of MicroCorp.  

What MicroCorp does not want is transactional agents, or the businesses that still sell on price and offer piecemeal products. Theres nothing there,” Miehl said. Theres cash flow now but I question whether it would be there later.”

Indeed, that touches on a concern thats growing among more traditional telecom agents, the ones who have relied on the one-time, cut-rate sales method. Recent discussions have revealed that many of those agents are desperate for an exit strategy as they realize their transactional business models wont survive in the world of hosted and cloud services few customers remain interested in lowest-cost long-distance rates or cheapest T1s. Instead, more end-users demand a trusted adviser who will oversee everything from security and system performance to disaster recovery and VoIP. But for a number of agents, tweaking their transactional approach to accommodate those demands would take more effort than they want to expend. Their best options seem to be to squeeze everything they can out of their current model or to find a buyer. The bad news, for them, is that those are not the agents MicroCorp is targeting.

What MicroCorp does want is companies with which it sees profitable synergies and shared visions for growth. That means purchasing a customer base that promises to continue generating new business. This could translate into MicroCorp snapping up agents in different geographic markets, for a larger footprint, or taking on a company to make us stronger with one specific carrier,” said Miehl. On the IT side, MicroCorp is keen on systems integrators, VARs and interconnects for the same reasons its aiming at masters, as well as for their expertise in hosted and cloud services.

Its not just the hosting of phone systems, a lot of it is about cloud computing as a whole,” Miehl said. We want to be the ones at the door offering a hosted solution when the time comes.”

The key is to focus on vertical markets and individual vendors core strengths, he added. That way, MicroCorp will avoid the shotgun approach” and offer its partners a disciplined strategy for reaching customers, Miehl said.

At least one company is drawn to that philosophy. After about eight months of developing its acquisition tactics, MicroCorp said it has signed a letter of intent with an unnamed peer. And judging from the response MicroCorp is receiving on its recent emails, the agency soon could announce additional activity. Interest has been good,” Miehl said. We have a good platform to offer other master agencies to roll their business into ours without them having to reinvent the wheel.”

The Details

MicroCorps intent is to buy the customer bases of systems integrators and interconnects with carrier-services businesses, and/or small master agencies with perhaps $1 million in per-month billing. When it comes to IT companies, MicroCorp would manage their customers services and provide the tools and resources for adding similar new clients. The original owners would earn residual compensation on the existing customer base. For small master agencies, MicroCorp would roll those operations into its own, including staff, back-office systems and supplier contracts.

Well acquire their company and they can have certain economies of scale and make the same amount of money they were making before under our model,” said Miehl. Its an appealing model for people looking to grow their businesses in a different way.”

Plus, consolidation among master agents should give the remaining, larger players more clout with carriers. Miehl expects to be able to negotiate better contracts and offer service providers more value since its agents will manage the customer relationship more deeply.

Its plain good business,” he said.

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