FusionStorm spun off its managed services business to Synoptek to create a new managed IT and cloud services company.
Terms of the deal were not disclosed. The new entity, dubbed Synoptek LLC, combines FusionStorm's managed services business with Synoptek's existing cloud and managed services business. FusionStorm CEO Dan Serpico will hold a seat on Synoptek's board of directors, and FusionStorm will hold a significant minority stake in the new entity.
FusionStorm, meanwhile, will continue to focus on its data center services and systems integration businesses going forward. "This was an opportunity for us to do two things," said Ed Korenman, vice president of marketing at FusionStorm. "The deal provides cash for us to invest in the things we do best, which is data center infrastructure and integration. At the same, we found a dedicated home for our managed services operation."
[Related: FusionStorm Back Away From IPO]
Synoptek initially was formed in 2005 after three IT consulting firms joined together to form a new venture. The Irvine, Calif.-based company has focused more on cloud services in recent years.
FusionStorm had aspirations of becoming a public company and even filed a $175 million IPO in August 2011. That IPO included a merger plan with two other solution providers: Red River Computer Company of Claremont, N.H., and Global Technology Resources in Denver.
But FusionStorm withdrew its IPO in May, and the merger plans were called off.
Korenman said the Synoptek deal isn't a response to the canceled IPO but more about funding future growth around its core business. He also said FusionStorm has been considering a sale or spinoff of its MSP business for some time.
"We've been exploring this for several months," Korenman said. "There have been multiple suitors and lots of discussions over that time."
This isn't the first time FusionStorm has sold part of its business. In 2010 FusionStorm sold its government-focused Jeskell division to CAS Severn, a government solution provider based in Laurel, Md.
Korenman said FusionStorm expects to work with Synoptek in the future and maintain close ties with new company. "There's a very strong business relationship there so we expect to be able to work together to take advantage of new opportunities," he said. "There's plenty of room for the two to collaborate."
The FusionStorm-Synoptek deal was managed by Martinwolf M&A Advisors, a mergers and acquisitions firm run by CRN contributor Marty Wolf.
PUBLISHED AUG. 1, 2013