DLT Solutions, No. 39 on CRN's 2014 Solution Provider 500 list, has been acquired by private equity firm Millstein & Co., the companies said late Friday.
The company was previously majority-owned by TZP Capital Group but will now be majority-owned by Millstein & Co. Terms of the deal were not disclosed.
DLT Solutions has made a name for itself in the channel as a premier public sector solution provider, with $857 million in revenue in 2013 and more than $900 million in 2014, CEO Rick Marcotte told CRN last week.
Millstein & Co. is a financial services, merchant banking and private equity firm that focuses on companies in the finance, technology, industrial, consumer and technology business services sectors. The company does not own any other solution providers, a DLT Solutions spokesperson said.
DLT Solutions is not the only solution provider being snapped up by private equity firms. Presidio was acquired by Apollo Global Management in December, Accuvant was acquired by Blackstone Group in March, ConvergeOne was bought by Clearlake Capital Group in May and CompuCom was acquired by Thomas H. Lee Partners in 2013. CSC has also been rumored to be knocking on private equity doors, but no deal has been announced.
As part of the deal, DLT Solutions President and CEO Rick Marcotte will step down after more than 10 years in the role, replaced by Millstein & Co. operating partner Alan Marc Smith. Smith was the former CEO of Westcon Group and has more than 25 years of industry experience. Marcotte will remain with the company as vice chairman of the board and consultant to the company.
“Under the leadership of [CEO] Rick Marcotte and his management team, DLT Solutions has grown into a leading value-added reseller to the public sector. We look forward to working with Rick and Alan Smith to continue the legacy and further enhance the company’s vendor and customer service capabilities," Michael Duran, partner of Millstein & Co., said in a statement.
Some DLT Solutions executives are taking an equity stake in the company, including Marcotte; Craig Adler, executive vice president and CFO; and Brian Strosser, executive vice president of sales and marketing. The equity stakes that the executives would be taking was not disclosed.
Millstein & Co. said it expects DLT Solutions to draw on the experience of its executive lineup, which includes extensive public sector experience at the IRS, Office of Management and Budget, and Small Business Administration. Founder Jim Millstein has been at the head of many restructuring efforts, including Chief Restructuring Officer at the U.S. Department of the Treasury from 2009 to 2011, as well as restructuring efforts at AIG, GM, Ford, Chrysler and WorldCom. However, a DLT Solutions spokesperson there are no plans to combine the business with other portfolio companies or consolidate the DLT Solutions business.
"The DLT investment is a stand-alone. No consolidation is contemplated," the DLT Solutions spokesperson said.
Marcotte said in a statement that he expects the private equity firm to continue to strategy that DLT Solutions has forged with a growing cloud business, customer relationships and technical services to public sector. In an interview with CRN last week, Marcotte outlined how DLT was working to shift its business to focus on cloud solutions and a "healthier services orientation," without aggressively changing the company away from a product focus.
“I am personally very pleased and proud at what DLT Solutions has been able to accomplish over my 10-plus years as president and CEO. This is the best team of professionals in this industry -- bar none,” said Marcotte in a statement. “I fully expect the Millstein & Co. stewardship to continue to aggressively pursue our strategy to grow our cloud capabilities, expand our customer relationships, and deliver top-notch technical services, sales, marketing and procurement efficiency to our public sector customers and our vendor partners.”
Martin Wolf, president of Martin Wolf M&A Advisors, who represented DLT Solutions in the transaction, said DLT is one of the "best-run VARs" he's ever seen, with strong operations and financial performance. He said the acquisition, combined with new leadership under Smith, will only continue to drive growth for DLT with a focus on operations, financial metrics and the cloud.
"I think this company will continue to grow," Wolf said. "I think they will try to carry on the operational excellence of the company and make it more of a cloud player," he said.
PUBLISHED FEB. 2, 2015