Strategic Products and Services (SPS) and Consultedge have confirmed they will merge, meaning a joining of forces for two VAR 500 solution providers and two major East Coast Avaya partners.
Both 22-year-old SPS and 10-year-old Consultedge specialize in converged network infrastructure, IP telephony, unified communications and mobility. Each is an Avaya Platinum Business Partner, which is Avaya's highest level of partner classification. The two companies are also based about five miles from each other in northern New Jersey: SPS's headquarters are in Parsippany, while Consultege's are in Whippany.
Financial terms of the deal were not disclosed. SPS, ranked No. 260 on the 2010 VAR 500, reported $97.2 million in gross revenue for 2009 in its VAR 500 filing, an increase of 8 percent over 2008. Consultedge, ranked No. 478 in the 2010 list, reported $24.3 million in gross revenue its filing, a decrease of about 20 percent from 2008.
According to SPS President John Poole, the deal represents a good opportunity for Consultedge to expand its capabilities using SPS' resource pool, and for SPS to add market presence in New York, New Jersey and North and South Carolina.
"We're doing a pretty good job of adopting the new Avaya go-to-market strategy using channels, and the investments we've made in engineering and talent are serving us well," Poole said in a CRN.com interview Monday. "There are companies, like Consultedge, that are challenged to make those same kinds of investments, making it difficult to service customers. For us to merge a company like that onto the SPS infrastructure and provide access to our NOC and converged engineering team is a win-win, especially for customers. Once the merger is complete, the Consultedge team can tell a whole different story, and for SPS, it's a really good way to grow and add scale."
The companies expect to complete the merger in August.
Consultedge marks the third Avaya Platinum partner acquisition by SPS within the past two years. In February, it acquired Covina, Calif.-based Spenser Communications, and in September 2008, it acquired Fairfield, N.J.-based PhoneXtra, both of which were also Avaya Platinum partners.
For solution providers, Poole noted, the networking and infrastructure markets require a much broader set of skills than before, especially in converged networking infrastructure.
"We're no longer selling phone systems. We have software applications, the need to monitor them and the need to tell customers what's going to happen," he said. "There's been a bump in the road in terms of the economy, but customers still require increased support and infrastructure. Smaller companies don't always have the revenue to cover that type of growth."
Poole declined to elaborate on how Consultedge's executive team would fit into SPS, saying that would be addressed once the acquisition is complete.
Executives from Consultedge were not available for additional comment Monday, although Neal Stanton, president and CEO, said in a statement that it was a "strategic evolution" for his company.
"We see this intended merger as a strategic evolution that will enable us to take our customers to the next level of integrated solutions and support offers," Stanton said. "In addition to strengthening our vendor partnerships, we will gain access to highly specialized engineers, a 24 x 7 network operationg center support and global resources to support our clients."
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