Sysorex Buys Lilien: Why Two VARs See The Value In Combining Expertise


"A lot of the expertise that Lilien has built up in these areas can be taken to the government space," Sysorex's Ali said. "We have the experience bidding on government contracts. We are on the GSA schedule, and on several prime and subcontract vehicles. We just won a multiple award for a $250 million Navy contract."

Sysorex is one of 13 small businesses that won that contract, online news site Washington Technology reported in February. The cost-plus-fixed-fee contract has a base value of about $50 million but could grow to up to $250 million if options are exercised, it reported.

Geoffrey Lilien said his company has had many calls with offers to acquire it, and has actually talked seriously to 20 to 30 of them, including Sysorex.

In this case, a business contact of Dhruv Gulati, executive vice president of Lilien, heard that Sysorex was looking to make an acquisition and brought it to the attention of his peers.

"At first, we thought, federal government and services? Where do we fit in?" Lilien said. "But then we met with Sysorex, and saw that their vision of where they want to take their business was the same as ours."

The two companies started talking about an acquisition in October or November, but did not close the deal until March, Lilien said.

The lack of overlapping operations between the two, combined with the fact that there would be no staff reductions, helped close the deal, Lilien said. "That's the real power of an acquisition," he said.

Sysorex expects to do more acquisitions, Ali said.

"We have companies in mind," he said. "We have a pipeline of deals we are evaluating. But we are also pursuing organic growth."

Ali and Lilien both declined to give a dollar value to the acquisition. However, San Francisco-based commercial finance and debt restructuring firm Business Capital said last month that it had structured a $5 million business acquisition package for Sysorex to acquire Lilien in a combination stock and cash deal.

PUBLISHED APRIL 17, 2013