DLT Solutions to be Acquired by TechData

First, the news: Tech Data announced it will purchase government value-added distributor DLT Solutions. Terms are not disclosed. This is the second major move into Fed/SLED by an international IT distributor.

This definitely grabbed my attention and sparked yet another of my occasional VAR Wars ramblings.

(One week after the TechData announcement, TechData was purchased by Apollo Global Management, a private equity firm. TechData will be going private in the New Year.)

The background:

In March of 2015 I wrote about Arrow Electronics buying immixGroup and I stated then that this was not the end of international IT distributors moving directly into the Fed/SLED arena. The details in the 2015 post give a good background the GovCon channel. In this article I suggested that DLT might be ripe for a purchase, but probably a few years down the road as they had just been acquired by a merchant bank (Millstein & Company). I also stated that I did not believe that Carahsoft would be for sale.

In May of 2017, I wrote about former immixGroup president Art Richer moving to DLT. In that post I suggested that Art would change the DLT model from working with a limited number of resellers to a broader array, as both Carahsoft and immixGroup had done.

A few years earlier Ingram Micro had purchased ProMark, a boutique Federal VAD. ProMark's purchase did little to change the market or establish Ingram as a direct player. ProMark is not in the same league as Carahsoft, DLT or immixGroup.

Over the past 20+ years DLT and immixGroup changed the IT distribution model in GovCon. When Craig Abod left DLT in 2004 and launched Carahsoft in 2005 he created the the third, (and soon to be largest) of the value-added distributors focused on the GovCon arena.

What fascinated me about the Arrow/immixGroup deal was the potential to alter IT distribution in our market. It showed foresight on the part of Arrow that a more direct role in the US Fed/SLED arena would help them expand sales into the world's largest consumer of IT.

What this means?

GovCon resellers often have preferred sources among the three VADs, but many resellers use more than one, depending on what a customer wants.

I am uncertain as to the near-term impact, but with the TechData/DLT deal looming, this brings more product bandwidth to an already vibrant player.

Some might think that this move would in some way limit Carahsoft's ability to get new OEM clients. The Arrow/immixGroup deal did not, so I don't think this will either.

I will address this again when there are more details and I have picked the brains of people more knowledgeable than me.

However, I will re-state that I do not believe that Carahsoft is for sale.