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PCM To Acquire Assets Of En Pointe Technologies For $15 Million, Plus Earn-Outs
In the second major deal between Microsoft partners in just a few days, PCM said Monday that it will acquire the assets of En Pointe Technologies for $15 million.
En Pointe, No. 42 on the 2014 CRN Solution Provider list, is a $393 million solution provider and systems integrator that is one of Microsoft's largest licensing solution providers in the country. PCM is No. 27 on the 2014 CRN SP500 list.
The news comes only hours after CRN reported that another major Microsoft partner, C ompuCom , sold its entire software business, including its Microsoft licensing business, to $3.3 billion solution provider SoftwareONE.
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The news confirms earlier reports in January by CRN that both En Pointe and CompuCom were looking for buyers. At the time, CompuCom declined to comment on the reports and En Pointe CEO Bob Din said the rumors were "simply not true" and the solution provider was "not for sale."
The acquisition is the largest by PCM to-date by revenue, the El Segundo, Calif.-based company said. PCM is buying En Pointe's assets for an initial cash price of $15 million, with certain earn-out considerations over the next three years, including 22.5 percent of the future adjusted gross profit of the business and 10 percent of certain service revenue. Under the deal, PCM will acquire all of the assets of En Pointe, excluding accounts receivable and inventory.
En Pointe appealed to PCM for the customer base it brings to the table, as well as key vendor relationships and geographic presence, said Jeffery Fowlds, CEO of Genesis Select Corporation, which runs investor relations for PCM.
"We are very excited to announce the pending acquisition of En Pointe by PCM. We believe that this acquisition will be very complementary to our commercial and public sector segments and provide us a tremendous opportunity to leverage PCM's existing services capabilities as incremental offerings to the En Pointe customer base. We also believe En Pointe will bring significant software and solutions experience that will ultimately benefit the PCM customer base as well," PCM CEO Frank Khulusi said in a statement.
En Pointe will be integrated under an indirect subsidiary of PCM and will maintain the En Pointe brand after closing.
PCM said "nearly all" 240 employees of En Pointe had been offered new positions at PCM. En Pointe President Michael Rapp, COO and CIO Shahzad Munawwar, Senior Vice President of Sales Robert Bogle and Senior Vice President of PSO Herbert Hogue will continue to manage the day-to-day business, PCM said.
"We believe the operational efficiencies gained by leveraging PCM's size, our combined national presence and scale and En Pointe's software and solutions expertise, will make this an incredible combination for our customers, partners and employees. We are thrilled that both organizations share a common commitment to operational excellence and customer satisfaction," Rapp said in a statement.
Martin Wolf, founder and president of San Ramon, Calif.-based Martinwolf M&A Advisors, who advised En Pointe in the transaction, said the acquisition was a "smart acquisition" for all parties and will "accelerate growth" for PCM. He said En Pointe and PCM are familiar companies, with compatible sizes and technical capabilities.
"I think they'll be rewarded for that," Wolf said. "I'm very hopeful that it will do well," he said.
The acquisition is expected to close April 1, according to the company's 8-K filing. PCM will be transitioning En Pointe's business during its second fiscal quarter and expects it to be accretive in the third quarter.
PUBLISHED MARCH 16, 2015