Presidio To Buy 430-Person Cisco Collaboration Titan Netech

Presidio made its purchase of $300 million Netech official Wednesday, acquiring one of Cisco Systems' top Midwest partners with expertise in cloud, security and collaboration.

The deal, which was first reported by CRN last month, adds 11 offices, 430 employees and a differentiated physical security unit to the roster of New York-based Presidio, No. 21 on the 2015 CRN Solution Provider 500.

’They really understand the industry and they run a good business,’ Bob Cagnazzi, Presidio’s CEO, told CRN Wednesday. "It's a terrific team and a good management team."

[RELATED: Sources: Presidio To Buy $350M Cisco Networking Powerhouse Netech]

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Cagnazzi said the acquisition of Caledonia, Mich.-based Netech -- No. 107 on the 2015 CRN SP 500 -- should result in real-estate consolidation, more preferred pricing for Netech and its customers, and higher gross profits for account managers at both companies thanks to more cross-selling opportunities.

Presidio has access to preferred pricing across several vendors and distributors that Netech isn’t privy to today due to Presidio’s edge in certifications and volume of business, Cagnazzi said.

Three of Netech’s four owners – founder and CEO Jim Engen, and his sons Tim and Ryan Engen – will be leaving the company to pursue other business interests.

The fourth owner – Jim Engen’s son-in-law Mark Wierenga – will move from being Netech’s executive vice president of sales and operations to president of Presidio’s North Central Area, reporting directly to Cagnazzi. Presidio is looking to keep all of Netech’s other employees, Cagnazzi said, which includes nearly 200 engineers holding more than 1,200 technical certifications.

Presidio expanded into the Midwest three or four years ago, Cagnazzi said, and does some business in Chicago, Indianapolis, Michigan and Ohio.

’It takes a long time to organically grow that presence,’ said Cagnazzi, noting that Presidio and Netech have only two or three common customers.

Terms of the acquisition, which was signed Dec. 31, were not disclosed. Presidio expects to close the acquisition by the end of March.

From a cross-selling perspective, Netech customers should be able to tap into Presidio’s cybersecurity, cloud, Internet of Things and managed services business unit soon after the acquisition closes.

Cagnazzi also expects to eventually expand Netech’s physical security offering to Presidio customers, but cautioned it will take much longer since it must be deployed locally rather than from a centralized location.

Netech’s physical security practice is unique, Cagnazzi said, in that it not only resells Cisco products but also offers non-IP products that can overlay Cisco or other IP-based technology. Therefore, Netech’s physical security products must be manually rolled out to new customers on trucks, which Cagnazzi said makes expanding into additional regions more complicated.

For the most part, though, Cagnazzi said Presidio and Netech support common vendors, technology areas and customer types. Both solution providers specialize in data center, collaboration, networking and security, Cagnazzi said, and have strong relationships with vendors such as Cisco, VMware, Dell and EMC.

Both companies specialize in servicing midmarket customers, Cagnazzi said, although Presidio might have a few more large enterprise clients due to the concentration of large companies near Presidio’s New York City headquarters.

This will be Presidio’s fourth major deal in the past three months, following the October sale of refurbished hardware subsidiary Atlantix Global Systems, No. 155 on the 2015 CRN SP 500, to private equity giant Millstein & Co., and the November purchase of cloud consulting, engineering and integration firm Sequoia Worldwide.

Presidio also plans to sell Sequoia into Netech environments, Cagnazzi said, and will continue making deals when there’s a good opportunity and a solid management team in place at the company being acquired.

Presidio received an infusion of capital in December 2014 when private equity powerhouse Apollo Global Management acquired the firm from American Securities.