New York-based VAR Net At Work announced that they’ve received a growth investment from private equity firm Lovell Minnick Partners. The company notes that the investment amount was not disclosed, “The investment from LMP will provide Net at Work with significant capital to pursue acquisitions and make growth investments in the business.”
Net At Work is listed at number 15 on the 2023 Bob Scott VAR 100 listing of top North American VARS. According to the publication, Net At Work has approximately 290 staff and $73.8 million in annual revenues and represents Acumatica, MIP, NetSuite, Sage 100/300/500, Instacct, and Sage X3.
The value-added accounting reseller (VAR) marketplace is consolidating rapidly. In the past ten years, the mid-market VAR landscape has shrunk significantly, which is only expected to continue. This is due to several factors, including:
- The increasing complexity of accounting software.
- The growing demand for cloud-based accounting solutions.
- The need for VARs to invest heavily in training and support.
As a result of these factors, smaller VARs are finding it increasingly difficult to compete. This is leading to a wave of consolidation as larger VARs acquire smaller ones to expand their reach and market share.
One area where we see the most consolidation is in the Sage space. There are a handful of larger Sage practices with ownership teams approaching retirement. This is creating an opportunity for other VARs to acquire these established practices.
Another area where we are seeing consolidation is in the Netsuite and Acumatica spaces. These cloud-based accounting platforms are becoming increasingly popular, and VARs that specialize in these platforms are in high demand. As a result, several Sage VARs are acquiring Netsuite and Acumatica practices to expand their offerings.
What does this consolidation trend mean for VARs?
The consolidation trend in the VAR industry presents both challenges and opportunities for existing VARs.
On the one hand, it can be difficult for smaller VARs to compete against larger, more established VARs. Larger VARs have the resources to invest in training, support, and marketing, giving them a significant competitive advantage.
On the other hand, the consolidation trend also presents opportunities for VARs to grow their businesses. VARs specializing in niche markets or offering unique services are well-positioned to succeed. Additionally, VARs willing to merge or acquire other VARs can quickly expand their reach and market share.
What should VARs do to prepare for the future?
VARs that want to succeed in the future must focus on developing their expertise and expanding their service offerings. They should also consider merging or acquiring other VARs to grow their businesses.
Here’s where we see leading VARS succeeding:
- Specialize in a niche market. This could be a specific industry, type of business, or accounting software platform.
- Offer unique services. This could include consulting on niche solutions such as business intelligence, implementation, training, or becoming a managed service provider (MSP).
- Merge or acquire other VARs. This is a great way to expand reach and market share quickly.
- Invest in training and support. This is essential for staying ahead of the curve and providing clients with the best possible service.
- Market your services effectively. This includes developing a solid online presence and networking with potential clients.
