ConvergeOne, one of the largest Avaya channel partners in the world, has a new owner.
The solution provider, which specializes in managed services and unified communications, was acquired by private equity firm Clearlake Capital Group for an undisclosed amount. Clearlake purchased ConvergeOne from Genstar Capital, another private investment firm that bought the solution provider in 2007.
"We have enjoyed a great partnership with Genstar," said John McKenna, CEO of ConvergeOne, in a press statement. "We look forward to partnering with Clearlake to continue to differentiate the company by focusing on managed services and innovative technology solutions. Clearlake's proven track record and substantial resources will be instrumental in adding lasting value to our business."
ConvergeOne was not available for comment. Clearlake Capital declined to comment on the deal.
ConvergeOne, headquartered in Eagan, Minn., consists of several operating units, including NACR, a top Avaya channel partner; ConvergeOne Technology, a managed service provider; and ConvergeOne Advanced Services (formerly SimpliCTI), a software-focused solution provider that ConvergeOne acquired in 2012. Along with Avaya, the company has strong channel partnerships with Cisco and IBM.
According to ConvergeOne, the company has more than 4,000 customers, many of which are Fortune 500. As part of the deal, Clearlake Capital's Founding Partner Behdad Eghbali, Vice President Prashant Mehrotra and investor James Pade have joined ConvergeOne's board.
Clearlake Capital has made a number of channel deals in recent years. Last year, the company bought Agilysys' Retail Solution Group (RSG) and Inventus, a data management solution provider. Clearlake also sold managed service provider Solutionary last year to NTT, the parent company of Dimension Data.
Anthony Lembo, principal at Martin Wolf, an M&A advisory firm, said the ConvergeOne deal continues the trend of private equity acquisitions in the channel.
"If you look at the success rates of some of the private equity firm acquisitions in recent years, such as CompuCom, you can see why there's more activity," Lembo said. "And, clearly, the private equity firms are offering value to the solution providers and giving them the kind of capital that they need to grow."
Lembo also said he expects more merger and acquisition activity in the telephony and networking space as the spaces continue to converge.
"The voice and data space is starting to blend together with networking and other parts of the data center," he said. "End users don't want to have technology silos, so I think we'll see more deals in the near future."
PUBLISHED MAY 15, 2014