Consolidation in the Hewlett-Packard enterprise partner channel is heating up.
Melillo Consulting, a $60 million HP enterprise solution provider in Somerset, N.J., Wednesday said it has signed a letter of intent to buy Software Quality Solutions (SQS), a North Brunswick, N.J., solution provider with expertise in the Mercury suite of products. Terms of the deal were not disclosed.
The acquisition comes on the heels of Logicalis' purchase of the IT division of Carotek. Logicalis, Bloomfield Hills, Mich., is HP's largest North American solution provider and Carotek, Matthews, N.C., is a $25 million regional HP enterprise solution provider.
Mark Melillo, president and CEO of Melillo Consulting, said the SQS acquisition gives the company instant expertise in the Mercury product line and rounds out its HP portfolio. HP acquired Mercury Interactive last year for about $4.5 billion.
Melillo said that SQS, which has about 15 employees, would be folded into Melillo Consulting's enterprise management business. SQS President Richard Klimkiewicz will become vice president and general manager of the enterprise management business.
"The Mercury product line is going like gangbusters and, while our people are trained up on the product line, this gives us a lot of credence right off the bat because people know SQS and their capabilities," Melillo said.
He noted that the SQS acquisition was Melillo Consulting's first one of substance, but he is looking for at least one more this year, possibly another HP regional solution provider.
"I'd like to do one more [acquisition] this year," he said. "We are having a couple of conversations with HP players, but we do IBM and EMC and we could do it around one of those product lines as well."
Melillo says he would be looking for a company without a strong services practice that could give him additional geographic reach while providing new opportunities for his company's services and consulting practices.
"You can buy them for a reasonable multiple because of their lack of services and it would open a huge customer base to sell services to," he said.
Melillo also noted that in the HP enterprise channel, size matters. "HP wants a smaller number of bigger partners," he said. "They are not saying they are going to get rid of anyone. What they are saying is that they are not going to put a lot of money into that [smaller] tier. They want to go with the bigger boys."
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