Two VAR 500 Firms Combine
MTM Technologies, formerly called Micros to Mainframes, continued its buying spree earlier this month, snapping up Wilmington, Del.-based IT management and consulting firm Info Systems. The acquisition comes just two months after MTM bought solution provider Vector ESP and a little more than a year after Pequot Ventures, the direct venture investment arm of Pequot Capital Management, invested $25 million in MTM (No. 312 on the 2004 VARBusiness 500).
The two acquisitions also come on the heels of MTM's signing an agreement with Pequot and Constellation Ventures, a Bear Stearns Asset Management Media, Communication and Technology Venture Capital Fund, for up to $40 million in additional financing.
Info Systems (No. 298 on the 2004 VARBusiness 500) has been in operation for more than two decades. The company is an Avaya Gold Partner, Cisco Silver Partner, Microsoft Gold Partner and Citrix Platinum Partner. More specifically, it provides VoIP, security, storage, connectivity and server-architecture solutions, as well as remote-network monitoring, management and support services.
Stamford, Conn.-based MTM Technologies will pay a total of $8.3 million in cash for Info Systems, or roughly $3.2 million in MTM common stock, plus $2.75 per share on closing day, and up to $1.7 million for certain unspecified circumstances.
MTM Technologies expects to finance the cash portion of the consideration through the issuance of additional equity and debt securities, according to a spokesman.
Among the factors that made Info Systems a solution provider worth buying were its solid management team, headed by president Mark Stellini, and its strength in the convergence space, according to Francis J. Alfano, MTM Technologies' chief executive.
"Mark [Stellini] was an early adapter and has been running a good, strong VAR," Alfano tells VARBusiness. "I also like that they have a strong Avaya capability. It gives us three bullets in our gun--Cisco [which Info Systems also employs], Avaya and Nortel. This sits well with our strategy and makes us somewhat agnostic. Info Systems also has storage capabilities."
In addition, the Info Systems acquisition further migrates MTM along the East Coast, adding five offices--Wilmington, Dover, Del., Philadelphia, Baltimore and York, Pa.--to what is now an arsenal of 25 offices. The combined MTM Technologies and Info Systems workforce will be approximately 590, according to the spokesman. And an industry source estimates annual sales are now roughly $215 million.
So, what's on the horizon for MTM Technologies? "We are continuing to build out our footprint. I am interested in building out our storage capabilities," Alfano says, adding that he also is focused on integrating the company's recently acquired businesses.
Pequot On the Move
Meanwhile, the source of much of MTM's investment capital, Pequot Capital Management and Constellation Ventures, is quietly investing in a number of IT-services companies, making them growing, albeit sub-rosa, players of importance in the industry.
Pequot Ventures, with more than $1.7 billion in capital commitments, has invested in a number of companies in the technology arena including:
- Tectura, a Microsoft partner that provides ERP and CRM solutions to enterprise customers;
- Kavado, a security solution provider for enterprises; and
- First Advantage, a provider of consulting services and solutions for customers that have screening services and risk-mitigation needs.
- Constellation Ventures, which also invested in MTM, manages approximately $450 million in venture capital and invests between $5 million and $35 million in companies in the early to mid stages of their development that enable the distribution and control of information over emerging digital networks. Its limited partners include Sony and Viacom.
- Some of the companies that Constellation Ventures has invested include:
- Network 24, an outsourcer of Webcasting e-services recently sold to Akamai, and
- Savvis, an over-the-counter service provider that offers VPNs, hosting and Internet services to midsize companies and the financial-services vertical.