ScanSource (Nasdaq: SCSC) has agreed to acquire IT solutions integrator and managed services provider MicroAge for $220.5 million, a deal that will add capabilities in cybersecurity, cloud, data center services and artificial intelligence while giving the distributor greater visibility into end-user technology needs.

The all-cash transaction is expected to close during the quarter ending Sept. 30, subject to regulatory approval and customary closing conditions. ScanSource plans to finance the acquisition through its existing credit facility.

MicroAge serves approximately 2,400 U.S. customers and has more than 200 employees. Its capabilities include cybersecurity, managed IT services, technology implementation and data intelligence, along with a team of specialized solution architects. The company has established relationships with technology suppliers including Microsoft, Dell Technologies, Sophos, Hewlett Packard Enterprise, CrowdStrike and VMware.

“MicroAge is an amazing, legendary company that has had tremendous brand recognition for more than 50 years,” ScanSource Chair and CEO Mike Baur said in announcing the transaction. “The acquisition expands ScanSource’s total addressable market, adds new services capabilities, and provides greater visibility into end-user needs.”

Moving further into services

Jay McBain, chief analyst for channels, partnerships and ecosystems at Omdia, said in a LinkedIn post that the acquisition is significant because it pushes ScanSource “further upstream” into higher-margin services, managed services and solution integration.

McBain placed the deal within a larger change taking place across technology distribution, where value is increasingly moving from product fulfillment toward recurring services, cloud, cybersecurity, data and AI.

ScanSource ranks No. 23 on Omdia’s Global Distribution 250 list, according to McBain, while MicroAge ranks No. 674 on the firm’s Global Partner 1000 list. Intelisys, ScanSource’s technology solutions distribution business, ranks second on Omdia’s list of the largest technology services distributors in the telecom distribution market.

“This is more than a revenue tuck-in,” McBain wrote.

He pointed to MicroAge’s end-customer relationships, technical talent, professional services and managed services capabilities as important parts of the transaction. Together, he said, those capabilities could expand ScanSource’s addressable market while creating new opportunities for its broader channel ecosystem.

McBain also connected the acquisition to a trend he has tracked for several years. In a report he published five years ago titled “Are Distributors the Future of Distribution?” he concluded that successful distributors would increasingly build digital distribution platforms and become more visible participants in the technology channel.

He described the MicroAge acquisition as an example of a distributor “coming out of hiding.”

ScanSource sees opportunity for channel partners

ScanSource executives provided more detail about the acquisition during the company’s fiscal fourth-quarter earnings call Thursday.

Baur said ScanSource had been looking for about a year for a company with a services strategy that could be expanded across its existing channel. MicroAge stood out in part because it had made its own transition from a traditional hardware reseller to a company with managed and professional services capabilities.

Baur said those services include cloud migration and management, cybersecurity services, next-generation AI data center implementation and AI solutions development.

ScanSource sees an opportunity to make those capabilities available to its existing trusted advisors and solution providers, particularly partners that may not have the technical resources to provide those services themselves.

Baur pointed to cybersecurity as an example. Many channel partners can sell a cybersecurity product but may lack the technical personnel needed to handle implementation, deployment and ongoing support. He said all but the largest partners generally do not operate their own network operations center or security operations center.

ScanSource has been looking for ways to provide those capabilities through what Baur described during the call as a “wholesale model,” allowing partners to draw on services and technical expertise without having to build those resources internally.

Addressing potential channel conflict

The acquisition also gives ScanSource a more direct connection to MicroAge’s approximately 2,400 customers, raising questions about how those relationships will coexist with ScanSource’s traditional channel partners.

Baur addressed the potential for channel conflict during the earnings call, describing it as “very low.”

He noted that midmarket and enterprise customers routinely work with multiple technology providers. As one example, Baur said ScanSource could already have a security VAR selling into an account where MicroAge is also doing business, with neither company necessarily competing for the same work.

Baur said that if MicroAge encounters an account where an existing ScanSource partner already has an established relationship, ScanSource intends to favor its channel partner.

The customer relationships also give ScanSource something McBain identified as an important part of the deal: greater visibility into what end users need and how they are buying technology.

Deal announced alongside strong quarter

The acquisition was announced as ScanSource reported fourth-quarter net sales of $953.1 million, up 17.3% from the same period a year earlier. Fiscal 2026 net sales increased 6.1% to $3.23 billion.

Recurring revenue grew 10.6% for the full year and accounted for 33.7% of consolidated gross profit, up from 32.8% the previous year. ScanSource reported $113.8 million in free cash flow for fiscal 2026 and ended June with $88.4 million in cash and $101.4 million in debt.

ScanSource expects the MicroAge transaction to increase gross profit margin, adjusted EBITDA margin and non-GAAP earnings per share during the first year after closing. The company also expects the acquired business to be free-cash-flow positive.

ScanSource’s fiscal 2027 guidance currently excludes MicroAge. The company expects annual net sales growth of 6% to 10%, adjusted EBITDA of $158 million to $165 million and free cash flow of at least $85 million.

For MicroAge, the transaction marks another chapter for a company with a 50-year history in the technology channel.

“We are proud of what the MicroAge team has built, and we see ScanSource as the right partner for our next phase of growth,” MicroAge CEO Larry Gentry said. “With ScanSource’s greater reach, resources, and channel expertise, we will be better positioned to scale our services-led model in high-growth markets, while continuing to deliver the customer-first experience that has defined MicroAge.”