The Datalink Deal That Almost Wasn’t

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By Michael Novinson, CRN

screen-shot-2016-11-07-at-9-39-52-amDatalink could have sold the company for $17 million more, but its lackluster financial results scared one prospective suitor away and prompted Insight Enterprises to cut its offer price.

Tempe, Ariz.-based Insight, No. 15 on the CRN Solution Provider 500, made Eden Prairie, Minn.-based Datalink, No. 43 on the CRN SP 500, work hard for a deal. Insight cut the transaction amount by $17 million and required what Datalink considered to be unusually high levels of financial transparency, according to SEC filings.”

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Comments

  • http://tech.mn Jeff Pesek

    This is an incredibly detailed report over a mere 7% of the final price…nonetheless there are some key takeaways:

    “Datalink’s Board of Directors sat down in late May with Raymond James,
    the company’s financial advisor, to discuss the systems integrator
    landscape, focusing on the pressures traditional IT companies face from
    next-generation technology and the ongoing erosion of industry profit
    margins.”

    TLDR; Datalink failed to innovate.

    “Datalink nonetheless decided to move forward with a $258 million sale
    due to the uncertainties of remaining an independent public company and
    the lack of a better offer, despite soliciting as many as 27 potential
    suitors, according to a proxy statement filed late Friday with the U.S.
    Securities and Exchange Commission (SEC).”

    TLDR; Datalink became desperate.

    “But Datalink’s legal counsel said these tasks don’t typically occur
    until after closing, and briefed the company’s board on the risks and
    considerations related to moving those tasks to before closing.
    Ultimately, Datalink’s board decided to let Insight’s exclusivity period
    expire on Sept. 30 and approach Party B and Party C about a deal.”

    TLDR; Datalink was trending down.

    “Datalink CEO Paul Lidsky, CFO Greg Barnum and Executive Vice President
    of Human Resources Patty Hamm will all leave the company following the
    Insight acquisition.”

    TLDR; Datalink leadership is bailing.

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