Presidio CEO: Business As Usual For Now, High Growth On Horizon After Acquisition

Presidio's acquisition by Apollo Global Management will mean business as usual for the short term but will yield strong growth and strategic investments in the long term, CEO Bob Cagnazzi said.

The acquisition, announced Monday, will transfer ownership of the solution provider, No. 22 on CRN's SP500 list, from American Securities to Apollo Global Management, both of which are private equity companies. Terms of the deal were not disclosed.

[Related: Presidio Acquired By Private Equity Firm Apollo Global Management]

In an interview with CRN, CEO Cagnazzi said that there are only positives to come from the acquisition, as the solution provider exchanges one private equity owner for another. For the short term, Cagnazzi said that it will be business as usual for the New York-based company, but there will be investments leading to strong growth over the long term.

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"We're not changing our strategy. We're not changing our go-to-market, it's still high-value, high-touch, local go-to-market model. We're not changing the structure of the business. We're not changing who our key partners are. We're not changing our organizational structure, our models, our management teams," Cagnazzi said. "The upside is, over time, you're going to see these increased investments, which we believe will make us a much more valuable organization to our customers, to our employees and to our shareholders."

American Securities has owned Presidio since 2011. The time was right for an acquisition as Presidio hit the private equity firm's objective goals for five year return on investment in only three and a half years, Cagnazzi said. While the company is private and doesn't have to disclose its growth numbers, Cagnazzi said that Presidio has been growing at a double digit CAGR for more than three years. The most recent estimate by Reuters in May puts Presidio's value at $1.5 billion, with annual revenues around $2.3 billion and earnings of $180 million.

The company boasts approximately 6,000 customers in the U.S. and over 2,200 employees, according to a company statement.

Cagnazzi said that Presidio was attracted to Apollo Global Management as a potential owner "from the very start." He said that Apollo has a similar view of the market and shares a common vision for Presidio's future.

"If we were going to do a deal, Apollo was the preferred partner to do it with," Cagnazzi said. "They look at the world the way we do. They believe there's a lot of opportunities for growth in the IT infrastructure services space. They see the world changing the way we do," Cagnazzi continued.

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One of those trends includes a rapid market consolidation driven by multi-vendor, multi-technology solutions and more capital intensive service delivery models, such as managed services and cloud services. Those trends drive a need to capital investment across different technology stacks and consolidation among smaller players who need more scale to accomplish that, Cagnazzi said.

"Our clients are demanding a higher level of integration capability, a higher level of technical capability and greater investments in capital-type solutions like cloud and managed services. Like us, Apollo believes that there is consolidation in the marketplace. They view Presidio as a premier asset in this industry and a premier platform on which we can continue to grow both organically and through acquisition, both on a geographic standpoint and on a services basis," Cagnazzi said.

Cagnazzi declined to say exactly what investments and acquisitions might be coming for Presidio down the road.

"We are pleased to be partnering with [Cagnazzi], his talented management team and Presidio's outstanding workforce. Together, they have successfully built Presidio into a leader in the IT services arena, and we look forward to supporting them in their ongoing growth initiatives," said Matthew Nord, partner at Apollo, in the statement.

Rumors have been swirling since May that Presidio was looking for a possible sale or planning to go public. While rumors of a sale have already proved true, Cagnazzi said that an IPO is not in the company's immediate future.

"That's something that is not really in consideration at this point in time. Will it be at some point in time? Possibly," Cagnazzi said. "It's certainly not out of the question that there would be an IPO at some point in time in the future, but what we're concentrating on right now is all the opportunities that we have to grow this business with Apollo," Cagnazzi said."

Cagnazzi said that he expects Presidio to see a long future with Apollo.

"We are not being bought for a short term return for Apollo, where they would turn around and sell us. We are being purchased as a platform to create long-term growth in the business. Apollo is long term investor," Cagnazzi said.