Software value-added resellers (VARs): Opportunities and challenges in 2025
Moore Kingston Smith’s Corporate Finance Director, Matt McRae, chats to Luke Hasty, CEO of Luasai, about value-added resellers and why they are currently under the microscope. The Moore Kingston Smith Corporate Finance team advised Luke and co-founder Zaheer Javaid on the sale of Nuaware, a born-in-the-cloud value-added distributor, to Exclusive Networks in 2024.
Matt: Luke, thanks for taking the time again. Last time we spoke, you shared your experience scaling and selling Nuaware, a value-added distributor. This time, I want to focus a bit more on the value-added reseller (VAR) space. From your perspective, what’s changing for resellers right now, and why might it be a good time to consider a potential sale?
Luke: I think we’re witnessing a pressure point forming around traditional VAR models. The rise of cloud marketplaces, AI-driven services and a general shift towards more integrated, packaged buying experiences are all factors that chip away at the typical ‘box plus time’ model.
That doesn’t mean VARs are irrelevant; far from it. However, I believe their role is being redefined. For those who have built something with real depth, solid relationships, domain expertise and perhaps even cloud solution provider marketplace fluency, there are now more strategic buyers viewing them in a different light. Transaction-only support is becoming less valuable, and the V in VAR is increasingly seen as a requirement to make a business an attractive acquisition target.
Matt: What are you seeing as the big challenges for the larger cloud-native technical services firms, which have rapidly expanded due to cloud migration and infrastructure work on AWS, Azure and Google Cloud Platform but now need to move higher in the stack?
Luke: They’re often great at technical plumbing, establishing landing zones and optimising costs but they don’t always maintain strong software or independent software vendor (ISV) relationships. So if you’re a VAR with deep ISV relationships in relevant areas of the cloud stack, that’s quite attractive to them.
There’s also a growing need to assist customers in navigating procurement through cloud marketplaces. AWS Marketplace, for example, has been growing at over 70% year on year and is expected to surpass $100 billion in sales in the next few years. It’s rapidly becoming the default route for purchasing third-party software but it’s not always straightforward.
You’ve got enterprise buyers confused about licensing models, internal teams unsure how to structure private offers and account executives who still view it as a procurement blocker instead of a sales accelerator. What these cloud-specific infrastructure firms are realising is that they need someone who can clarify the licensing landscape, collaborate with ISVs and effectively close deals within the marketplace environment.
Matt: So, for a VAR that understands how to transact software on AWS or Azure, and can help clients and partners make sense of that channel, there’s suddenly a lot more strategic value on the table.
Equally, we see this with IT support businesses that are looking to expand their capabilities and see the acquisition of a software VAR as a way to deepen their ties with customers and offer greater expertise in what is a developing software landscape.
This means that for a VAR that has really understood where their ‘value’ comes from, and can demonstrate how that could be scaled, there are lots of strategic options to scale. To summarise your thoughts, would you say that the larger cloud-native technical services firms are looking for VARs to help them sell more ‘outcomes’, rather than just infrastructure?
Luke: I would frame it that way, yes. It’s not solely about customer lists; it’s more about assisting them in bridging the gap between cloud infrastructure and business value. A smaller VAR with domain knowledge and some marketplace capabilities can be exceptionally beneficial in that regard.
Matt: Interesting. And what about the established traditional resellers? Are you seeing any key trends emerging?
Luke: Some of them are trying to modernise their practices. What I’m noticing is that larger resellers are looking to transform deep expertise into software-like offerings, often incorporating an AI component.
This might also mean that they acquire a specialist VAR in, say, cloud security, and then use that knowledge to train an AI support assistant or develop a repeatable solution that doesn’t depend on hiring another dozen consultants. It’s a clever way to scale if you can make it work.
Matt: So in some cases, they’re not just buying talent, they’re buying the IP or processes that can be codified?
Luke: Exactly. It’s about getting hold of structured, well-practised know-how. And if a founder’s built a business with clearly defined ways of working, reusable IP or even just really good delivery frameworks, an acquirer could scale that more effectively, especially with a bit of AI layered in.
It’s not something I think most small VARs have set out to build but it’s a by-product of doing good work over time. That knowledge becomes valuable.
Matt: If you’re a founder of a VAR, why start thinking about selling now?
Luke: The honest answer is that you shouldn’t wait too long. Most founders delay action until they are exhausted or until things start to slip. But by then, your options become more limited, and you find yourself negotiating from a disadvantage. The dramatic rise of AI and cloud marketplaces also presents a unique opportunity at this moment in time.
Your business is often most attractive to buyers before you realise it, like when operations are running smoothly, the team is stable and customers are renewing quietly in the background.
That’s the moment to test the water, not when you’ve had enough or reached the limit of what you can achieve as an SME. Even if you’re not planning to sell, preparing as if you might is good practice. It encourages you to clean things up, reduce owner reliance and generally run a better company.
Matt: Agreed – this is something we see time and again with successful founders leaving value on the table by not wanting to commit to running the business for a few more years post-transaction. Final thought: what would you say to a VAR founder who’s not sure whether they’re ‘sellable’?
Luke: I’d say, have a chat with someone at Moore Kingston Smith. That’s where we started. It helps you gain a better understanding of what your business is worth and they can advise you on what could help increase value while you still have time to do something about it, rather than waiting until the point you are definitely ready to exit.
You don’t need to be perfect or at scale. Sometimes, just having the right relationships, the right technical capabilities or a solid position in a niche is enough to open intriguing doors.
Matt: And just before we wrap up, what are you working on now at Luasai that’s relevant to this shift in the VAR and channel landscape?
Luke: We’re trying to solve some of the pain points I’ve seen firsthand. Traditional routes to market don’t quite line up with how software is actually being bought now. At Luasai, we help software vendors modernise their channel strategy, particularly how they transact through cloud marketplaces. We work closely with partners to make that model scalable.
That means helping resellers list services, become marketplace-enabled and turn their delivery work into something that can be bundled and sold like a product. We also use AI to make that enablement much faster, both for onboarding new partners and for helping technical teams sell with more confidence.
It’s early days, but the reception’s been strong. I think there’s a clear need for something that sits between traditional distribution and modern cloud sales, and that’s where we’re aiming to sit.
Get expert advice early on
Even if you are not planning to sell for some time, talk to us at Moore Kingston Smith. Our integrated team of tax, legal and financial experts will find the best structure for your business at the outset to ultimately maximise your sale value.
