Synoptek, the private equity-backed managed IT service provider, continues to acquire assets and businesses across the MSP market. The latest move involves buying EarthLink's IT services business for $29 million. The deal diversifies Synoptek's technical expertise, while expanding the company's customer footprint and geographic reach.
Instead of pointing to potential business differences, Synoptek highlights key synergies with the acquired assets. They include 24/7 IT management of customer IT systems, managed cloud solutions, managed security, end user support, and IT advisory/consulting solutions, the company asserted. The deal, Synoptek added, expands the California-based company's footprint in the eastern US while complementing the company's national data center infrastructure.
Synoptek is taking on a big customer base -- about 1,700 IT services customers from EarthLink's portfolio. Synoptek had about 400 customers ahead of deal. According to an email from EarthLink to IT services customers, a joint support agreement between Synoptek and EarthLink will ensure continued, high-quality customer support.
Synoptek's Private Equity Funding
Synoptek is backed by Sverica Capital Management, a private equity firm that acquired the IT service provider in October 2015.
Sverica has supported the company by providing strategic board level oversight, M&A support, and facilitating debt and equity financing which will help fuel continued organic and acquisitive growth, the PE firm says.
“We are enthusiastic about the Synoptek purchase of the EarthLink IT Services business,” added Tim Britt, CEO for Synoptek, in a statement today. “This acquisition helps us continue our mission to become the best independent IT Managed Services Provider in the market, and it supplements our ability to provide expert IT leadership and support services to our customers.”
Private Equity and other MSP Backers
Still, Synoptek faces plenty of competition as it strives to grow organically and through M&A. Numerous private equity firms and big vendors are navigating the MSP and IT consulting market, seeking potential M&A deals. For instance:
- Clearlake Capital Group, another PE firm, purchased Pomeroy and merged it with Tolt Solutions in late 2015.
- Court Square Capital Partners, a private equity firm, acquired AHEAD — a major IT solution provider based in Chicago, in late 2015.
- Presidio, backed by PE ownership, acquired Netech, a $300 million Cisco partner, in January 2016.
Also, giants like Konica Minolta (owner of All Covered) and Ricoh (owner of mindSHIFT) remain in the market.
Basic market demographics -- coupled with disruptive IT waves like cloud computing -- should generate more and more IT service provider acquisitions through 2022 before the market for buyouts potentially plateaus around 2023 or so.
