Tech Data flexes financial muscles after Apollo deal

Tech Data has always indicated that its acquisition by Apollo would give it the sort of financial backing to drive the business forward – and the first signs of what that means in practice have been shared by the distributor.

The channel player has now closed the deal with Apollo Global Management and has already started looking forward after revealing that it plans to spend $750m in the next five years to accelerate digital transformation initiatives.

“Tech Data’s acquisition by the Apollo funds is a significant milestone, and their support of our multi-year commitment of resources underscores our collective focus on long-term value creation,” said Rich Hume, CEO of Tech Data.

“We are excited to enter Tech Data’s next chapter as a private company with our new sponsors at Apollo, who have a track record of building great businesses in our sector. Having a single, strategic equity owner that is fully aligned with our mission we believe gives us a real advantage in accelerating our transformational strategy and allows us to think more creatively – without the short-term demands that can come with public ownership.”

Hume will continue at the helm of Tech Data and, under his leadership, the distributor has been following a four-pronged approach – investing in next-generation technologies, strengthening the end-to-end portfolio, transforming its business digitally, and optimising its global footprint.

“We continue to execute on our strategy to transform our company into one that defines a new standard of operational and cultural excellence in our industry,” he said. “We believe Apollo will be an invaluable partner in helping us better enable our channel partners to bring to market the technology products and solutions the world needs to connect, grow and advance.”

The funding plans should help strengthen the distributor’s position as a leading global player, with money going towards delivering more automation, platforms and analytics that, according to the blurb, will allow the firm “to be more agile and responsive to the rapidly evolving needs of its channel partners”.

Tech Data is setting off to build a hyper-scalable digital business platform and a cloud-based digital marketplace as part of its plans over the next five years. At its virtual event last week, the firm revealed that plans to roll out a cloud marketplace were well under way and resellers should soon see the fruits of those labours.

Apollo viewed the spending plans as part of its backing for the distributor’s long-term vision, with Matt Nord, co-lead partner of private equity at the financial specialist, stating: “Tech Data is a global, market-leading company with an excellent management team and significant opportunities for expansion.

“As a result of this acquisition and the resources we can bring to bear, Rich and the Tech Data team will have the strategic and financial flexibility to invest in new technology, expand services and pursue transactions that we believe will drive long-term value creation.”

Robert Kalsow-Ramos, private equity partner at Apollo, added more details to the decision to support the digital transformation plans. “Apollo sees Tech Data as a strong platform for meaningful growth and further diversification, and we are committed to supporting investments that build on this vision,” he said.

“This investment over the next five years helps ensure the company has the resources necessary to launch a bold digital enablement and innovation programme that will transform the way it serves channel partners and employees.”