Trace3 Expands Government Reach With Zivaro Acquisition

‘Zivaro not only extends their capabilities to the folks at Trace3 serving state and local clients, but Zivaro also now has access to a whole host of service offerings as well as OEM technology capabilities that perhaps they didn’t have as a stand-alone company. So we think there’s a really good capability uplift for both Trace3 and Zivaro,’ says Trace3 President Joe Quaglia.

IT solution provider and business transformation consultant Trace3 Thursday said it has acquired Zivaro in a move to significantly expand its reach into the federal government and state, local and education market.

With the acquisition, Irvine, Calif.-based Trace3 also gains a major presence in the Denver area where Zivaro is based.

Trace3, ranked No. 35 on CRN’s 2024 Solution Provider 500, is a profitable company that has grown both organically and inorganically over the past 23 years and about three years ago was acquired by private equity firm American Securities, said Trace3 President Joe Quaglia (pictured). American Securities also owns Exeter, R.I.-based NWN Carousel.

Trace3 currently does business in all 50 states, Quaglia told CRN.

“We usually play in the enterprise to upper midmarket,” he said. “We have a big presence in security, cloud, infrastructure, data analytics, as well as contact center and collaboration. We’ve got a very large services footprint, and the way clients usually describe our systems integration capabilities and consulting capabilities alongside our technology capabilities as sitting between a systems integrator and a traditional VAR. And we enjoy sort of sitting there because our conversations are very solutions-oriented with a services-first approach.”

The acquisition of Zivaro is a pivotal moment for Trace3 as it continues to expand its capabilities and reach, Quaglia said.

“Zivaro is an IT solutions provider and integrator for government and critical infrastructure customers,” he said. “Think public sector, federal, state and local, education. They’ve got a big office in Colorado Springs where quite a bit of the service capabilities are performed.”

Zivaro, which is Trace3’s seventh acquisition, fits the company’s three basic requirements for expanding via acquisition, Quaglia said.

“We tend to think of acquisitions in three buckets: culture, capability and coverage,” he said.

“And when we look at the Zivaro team, the first and foremost thing that stands out is we’re bringing on over 200 talented and skilled teammates from Zivaro to join forces with over 1,300 skilled and talented teammates here at Trace3. And when you put those two together, it’s a very winning combination for our clients and our partners. So we’re excited about bringing the two cultures together.”

The second piece is the capability that Zivaro brings to Trace3 around the federal and government space, Quaglia said. “We’ve had some state and local, but not to the extent that Zivaro specializes in serving large federal agencies and the Department of Defense, Department of the Interior, and many large federal agencies, as well as a whole host of state and local and education organizations around the country.”

On the coverage side, Zivaro brings Trace3 expanded coverage in the commercial and health-care markets, particularly in the Rocky Mountain states, Quaglia said.

This past summer, Trace3 established two primary vertical business groups: the Financial Services Group and the Health Services Group. Trace3 will expand its vertical focuses by basing a new Trace3 Government vertical based on its Zivaro acquisition, Quaglia said.

“This is a super exciting opportunity not only for Zivaro,” he said. “Zivaro not only extends their capabilities to the folks at Trace3 serving state and local clients, but Zivaro also now has access to a whole host of service offerings as well as OEM technology capabilities that perhaps they didn’t have as a stand-alone company. So we think there’s a really good capability uplift for both Trace3 and Zivaro by that combination.”

The acquisition of Zivaro is part of Trace3’s strategic plan to grow organically and inorganically, Quaglia said.

“We’re always keeping our eye open for inorganic or M&A opportunities, and we look for opportunities that could either give us more capability than what we could do ourselves or help us expand our coverage across the U.S. and other territories more quickly than we can do ourselves,” he said.” And there’s still a talent war out there, and anytime we can pick up, in the case of Zivaro, 200-plus talented folks to join forces, it just makes Trace3 better in terms of serving clients, but also more competitive in the market.”

Acquisitions aren’t easy, Quaglia said.

“It has got to be the right time and the right fit, and in this case everything just so happened to line up,” he said. “It was some time ago when we did an initial reach out to Zivaro. That’s really what got the conversation started.”

Going forward, Zivaro’s current CEO will serve in an advisory role at Trace3 before eventually moving on to other opportunities, Quaglia said. However, Thomas De Angelis, Zivaro’s CRO, will stay with Trace3 to run the new Trace 3 Government vertical business, he said.

Trace3 will likely close other acquisitions in 2025, Quaglia said.

“That’s our stated direction,” he said. “Knock on wood. We can find some really good opportunities in the market. Sometimes you can do a couple of acquisitions, and sometimes it just doesn’t work out. But it fits into our organic strategy, and we’re looking forward to closing out 2024 strong and getting started in 2025.”