Berbee CEO: CDW Deal Worth The Effort

The CEO of Berbee Information Networks said his company's $175 million sale last September to reseller CDW was a long and tedious process, but a necessary one for the merger to be successful. The results now are proof that the deal—one of the most high-profile deals in recent memory—was worth the effort, Shain said.

"Looking back, we're delighted with the decision we made. Having roughly five and a half months behind us now, we wouldn't have made a different decision," he said.

Since becoming "a CDW company," Berbee, a $400 million solution provider based in Madison, Wis., has had a number of joint wins with the Vernon Hills, Ill., direct marketer and the two businesses are complementing each other nicely, Shain said.

"The folks at the street level are the ones that see the opportunity and were out executing from the get-go," he said.

In particular, Berbee has leveraged CDW's configuration capabilities with a number of large customers, Shain said.

"We bring the products into CDW's distribution center, custom-configure and ship out in a staged process," he said. "It's a point of differentiation. Combined, it has allowed us to win in places where individually I don't think we would have been able to win. Overall, [the merger] has worked just as we hoped it would."

Since then, CDW has stated it wants to buy other regional enterprise solution providers to build on its "Berbee platform" of providing enterprise-level products and services on a local basis. It has not closed any deals since Berbee last September, but the strategy remains in place, Shain said.

"Our objective is to extend geographically, replicating our reach in six states to the rest of the country. We're working aggressively down that path," he said. "Prior to entering this industry, I spent 15 years in investment banking. One thing that taught me was to be very patient and make sure you're doing the right transaction rather than just a transaction. We are following a methodical process. We haven't set any specific time frame [for CDW to make another acquisition]," he said.

Berbee's leadership decided to sell the company because it felt the IT industry had matured to a point where larger companies would have a competitive advantage.

"This was a strategic decision vs. a life-changing or retiring decision. We probably aren't your classic baby boomers," said Shain, 44 (founder and former chairman Jim Berbee is 43). "Scale is important in this business. As the complexity of technology increases, customers want more capabilities, from a transactional run-rate business and e-commerce support through advanced technologies with professional services capabilities to deploy that technology. All solution providers need to figure out where they fit in that, knowing that customers will demand an expanded model and the best of all worlds. I don't see that slowing down at all," Shain said.

Berbee engaged a third party to identify and research potential acquirers, a list that eventually included direct marketers, other enterprise solution providers and private equity firms, Shain said.

"We went through a careful analysis to decide what was best for our customers, our co-workers and our shareholders. It was a very planned, structured process. We had a very targeted list that we approached with our marketing materials. We didn't rule any categories [of buyers] out," he said.

It was a fairly typical M&A process once CDW emerged as the top candidate, Shain said. "We have not had any roadblocks that created problems," he said. "Our approach was to assume that we didn't have all the answers. We spent a great deal of time understanding the dynamics of each of the business models. We thought we understood what CDW did, but we spent the first couple of months just learning how they went about their business, what drove their business. Even though at 10,000 feet, you think you know a lot, but we took a cautious approach."