IBM VAR Sirius Lands Equity Funding

Sirius Computer Solutions, one of IBM's largest solution providers, has received an equity investment aimed at helping the company expand its reach and prepare for possible acquisitions.

San Francisco-based Thoma Cressey Equity Partners provided the funding, the amount of which wasn't disclosed. The move comes at a time when the solution provider space is rapidly consolidating, said Joe Mertens, executive vice president at privately owned Sirius.

"We want to be one of the consolidators, not a consolidatee," Mertens said.

San Antonio-based Sirius already has a nationwide presence, Mertens said. "But there are some geographies where we still need a footprint," he added. "Also, we are looking to acquire certain skill sets with our historic IBM focus."

With the new equity funding, Sirius hasn't set any immediate acquisition plans, Mertens said. Yet the company is no stranger to acquisitions.

In 2004, Sirius purchased Denver Solutions Group, a solution provider focused on IBM zSeries mainframes. And in 2002, Sirius acquired two other solution providers: Houston-based Strategic Systems and Beaverton, Ore.-based Symatrix Technology.

Sirius has grown organically about 15 percent annually for the past couple years, as well as about 10 percent to 15 percent yearly due to acquisitions, and it has been profitable since it was founded, according to Mertens. The company is IBM's top solution provider for almost every IBM product except for mainframes, where it is No. 2, and x86-based servers, where it is No. 4 or No. 5, he said.

Despite the strength of its business and IBM relationship, Sirius still must seek to propel growth, Mertens noted. "Customers are looking for firms that are larger and more capable in terms of geographic presence and skills," he said. "Capital investment is helping to drive consolidations. VARs need strong skills."

Thoma Cressey has acquired a number of ISVs over the past couple years. Managing partner Orlando Bravo said the investment firm noticed that many of the ISVs it acquired tap the channel, leading the company to consider investing in a solution provider.

"Every single one of our portfolio companies are involved with the channel, or should work with the channel," Bravo said. "We noticed that and took a step back and saw Sirius as No. 1 in the IBM channel. Once we saw their operations and management, we thought they would be good to invest in. And we thought our software portfolio would benefit from Sirius."

For now, Thoma Cressey doesn't plan to take a similar stake in other solution providers, Bravo said. "Sirius is our platform for expansion in the industry," he said. "We're looking to back Sirius to expand in this area. Sirius will be our platform."

Thoma Cressey will have a seat on the Sirius board of directors but won't be involved in the solution provider's day-to-day management, Mertens and Bravo said.

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