Hardware, maintenance and support provider CXtec has acquired longtime IT equipment reseller Atlantix Global Systems in a move that significantly increases the scalability of both parties and creates a force to be reckoned with in the life cycle management space.
CXtec said its purchase of Norcross, Ga.-based Atlantix, No. 165 on the CRN Solution Provider 500, will expand the Syracuse, N.Y.-based solution provider's "equal2new" lineup of refurbished network and voice equipment to include server and storage products.
Perhaps more importantly, the deal promises to strengthen CXtec's third-party maintenance (TPM) offering and bring IT asset disposition (ITAD) services to the combined company's enterprise customers.
"Achieving critical mass scale is necessary to be able to maximize the life cycle window that customers have," CXTec CEO Peter Belyea said. "It's really positioned the combined CXtec-Atlantix as a life cycle management company."
Financial terms of the deal, which closed on Monday, were not disclosed.
The lack of any significant customer overlap between CXtec and Atlantix became a major driver behind the acquisition, Belyea said, because of Atlantix's well-established presence in the secondary hardware market and its strong relationships with IT equipment dealers and brokers. CXtec, on the other hand, has primarily done business with enterprise-class customers.
Given the fragmented state of the secondary market, Belyea believes the combined company of around 400 employees is uniquely positioned to become a one-stop shop in the space.
The supply strategy will significantly rely upon the augmented third-party maintenance support, which CXtec views as being part of a complete set of life cycle services and solutions. Belyea believes the acquisition of Atlantix gives the combined company an "incredibly competitive" TPM offering that can match services offered by firms that exclusively focus on the TPM space.
Brian Glahn, president of Atlantix, will remain in his current role and channel his efforts into the server, storage and ITAD businesses. Belyea, who will lead the combined company as CEO, said he expects the two sides to achieve full integration within six to nine months, but added that they should begin to enjoy some synergies of the new relationship sooner.
“Joining CXtec provides us with access to an extensive end-user customer base which creates additional opportunities for significant growth in the IT marketplace,” Glahn said in a statement. “We look forward to integrating their company philosophy into ours, allowing customers to decide when and how to upgrade their technology infrastructure.”
Both CXtec and Atlantix have been purchased by private equity firms within the past two years. H.I.G. Capital completed its acquisition of CXtec and its Syracuse-based sister company, Terecai, in August 2016. Presidio sold Atlantix – then a subsidiary of the solution provider giant – to Millstein & Co. in October 2015, when top channel advisor Martin Wolf told CRN that the deal gave both sides a chance to capitalize on a "fragmented market" with scale.
The CXtec deal would seem to be a continuation of that theme. Belyea anticipates more inorganic growth moving forward as the combined company seeks to fill "key strategic gaps" within its life cycle services strategy.
"The real magic of this acquisition is the fact that we have tremendous scalability in the life cycle space," Belyea said. "It allows us to do secondary market hardware from networking through server storage. It provides us with a very comprehensive IT asset distribution capability and really gives us this incredible TPM option. Combined, we can really provide enterprise-class customers with comfort through a scalable, stable company that can solve more than just one piece of their problem.