MSP NetGain Steps Up Acquisition March With U.S. Teks Deal

NetGain Technologies, a fast-growing managed service provider (MSP), continued its aggressive acquisition march, expanding into Alabama by acquiring U.S. Teks.

The deal brings NetGain 50 managed services contracts at over $100,000 a month, along with 10 employees from Birmingham-based U.S. Teks, said Jason Jacobson, director of corporate development for NetGain, a 29-year-old, third-generation-family-run business. Terms of the deal were not disclosed.

[Related: Analyst Firm Predicts Huge Managed Services Growth, But MSPs Urge Caution ]

The acquisition is the fifth in three years for NetGain, a $30 million regional MSP power and member of CRN's TechElite 250. And NetGain is not done.

The Lexington, Ky.-headquartered NetGain, whose "big, audacious goal" is $3 million a month in managed recurring revenue, will continue to expand through acquisitions in other tier-two and tier-three markets in the Southeast and Midwest, said Jacobson.

"I am talking to people every day in specific markets," said Jacobson. "I am sure we will continue to acquire companies." Among the markets that NetGain is eyeing for expansion include in Nashville and Knoxville, Tenn., and in Jacksonville, Tampa and Fort Lauderdale, Fla.

NetGain's Technology OneSource managed service offering, which among other areas includes managed security, cloud computing, hosted virtual desktops and help desk, has carved out a robust business in the financial market with banks. The MSP's sweet spot is a complete IT-outsourced environment for 25 to 250 users, said Jacobson.

"We are hearing more and more from our customers: 'Be our IT department,'" said Jacobson. "You do technology better than we do.'"

Jacobson said he still sees big opportunity in the managed services market with many customers still running their own internal infrastructures.

NetGain's biggest competitive advantage is that it combines its managed services prowess with a robust technical team that can take on complex IT-environment projects, including Cisco VoIP, Cisco networking, EMC storage, Hewlett-Packard and VMware, said Jacobson.

"Many managed service providers don't have the certifications and engineers to do on-site project work," he said. "We have the best of both worlds, so we can provide managed services for a bank with 15 locations and 200 employees and, at the same time, provide project work like upgrading their EMC storage or Cisco network. Our customers don't need to go to another provider to get that done."

Jacobson said the existing U.S. Teks employees will remain in place, working with customers, with NetGain moving to supply those customers with additional managed services and IT talent around solutions like Cisco VoIP and data center offerings.

Before the U.S. Teks deal, NetGain's most recent acquisition was in June when it acquired NCDTech, a St. Louis MSP and technology consulting firm.

PUBLISHED SEPT. 26, 2013