IT solutions provider Presidio has been acquired by private equity firm BC Partners for $2.1 billion, including Presidio's net debt, the companies confirmed this morning.
The deal is expected to close by the fourth quarter of 2019, at which time Presidio will go private. However, the agreement include s a 40-day "Go Shop" period -- allowing Presidio to accept a more lucrative offer if such a deal surfaces.
Presidio has been publicly held and also backed by Apollo Global Management, another private equity firm. The IT solutions provider -- a close Cisco Systems, Dell EMC and VMware Cloud on AWS partner -- has pushed hard in recent years into the MSP, cybersecurity and digital solutions markets. In fact, Presidio now ranks among the world's Top 100 MSSPs, according to MSSP Alert.
The deal continues a private equity spending spree across the IT channel -- as investment firms snap up IT solutions providers, managed IT service providers (MSPs) and consulting firms that have cloud, digital and cybersecurity expertise.
BC Partners Acquires Presidio: Executive Perspectives
In a prepared statement about the deal, Presidio CEO Bob Cagnazzi said:
“We believe this transaction will provide immediate and substantial value to Presidio stockholders, while providing us with a partner that can add strategic and operational expertise to our business, with a focus on executing our long-term strategy.
Added Fahim Ahmed, lead deal partner of BC Partners:
“Over the last several years, Presidio has become the leader in designing, developing, deploying and managing agile secure IT infrastructures that drive real business value for thousands of commercial and public sector entities across the United States. We look forward to supporting the Company in its next phase of growth.”
Concluded Raymond Svider, partner and chairman of BC Partners:
“Presidio fits squarely with our key investment priorities. Its markets benefit from secular growth, as IT systems and networks have become increasingly complex. It is well positioned as a leader in a fragmented industry, offering scope for further expansion. We’re excited to partner with Bob and his team to support the future growth of the business."
BC Partners Acquires Presidio: Company Timeline
Presidio has evolved its business organically and via M&A (mergers and acquisitions) in recent years. Recent highlights from the company timeline include:
- February 2015: Apollo Global Management acquired the firm in 2015. At the time, Presidio had more than 2,400 employees -- of which 1,500 were engineers.
- November 2016: Presidio IPO prospectus reveals company's digital infrastructure, cloud and security growth strategy.
- March 2017: Presidio returned to public markets in an IPO -- though Apollo maintained a stake in the firm.
- October 2017: Software solutions practices launches.
- August 2017: Presidio ranks among the first VMware Cloud on AWS partners.
- February 2018: Quarterly earnings reinforce company's growing shift toward recurring revenues.
- May 2018: Presidio acquires Red Sky Solutions, a cybersecurity consulting firm, for $40.8 million -- or a valuation of 6.8 times annual EBITDA.
- August 2018: Presidio Concierge, a multi-cloud subscription and cost management service, emerges.
Private Equity and IT Solutions Providers: Next Moves
Presidio is the latest in a growing list of IT solutions providers acquired by private equity. And the deal pipeline will remain strong for at least the next few months, barring a major economic slowdown, ChannelE2E believes.
Private equity firms have billions of dollars in "dry powder" -- money raised from investors -- that has to be put to work over the next few months. The financial stockpiles have triggered strong M&A across the MSP sector, as investors seek to find recurring revenue alternatives that are less costly than pure SaaS companies.
Still, ChannelE2E does worry about a potential market correction involving private equity and MSPs. Valuations have surged amid the investment frenzy, and some private equity firms are discovering that scaling MSPs and IT solutions providers is far more difficult than scaling pure SaaS businesses, ChannelE2E believes.
Those ChannelE2E concerns don't necessarily pertain to the BC Partners-Presidio deal, but we continue to watch the private equity market closely for signs of a potential valuation correction in and around the IT solutions provider sector.
