EarthLink Sells IT Services Business to Rising Star Synoptek For $29M

Synoptek will double its workforce, quadruple its customer base and become a truly national managed service player by purchasing EarthLink’s $37 million IT services business.

The Irvine, Calif.-based company said its $29 million acquisition of Atlanta-based EarthLink's 210-person business unit will provide Synoptek with the necessary data center infrastructure to support customers from coast to coast.

"This will be a great joining of forces," Tim Britt, Synoptek's CEO, told CRN. "It'll enable us to invest in more new and better services."

[Related: Private Equity Behemoth Sverica Capital Management Buys Synoptek, One of The Nation's Largest MSPs]

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Further details of the deal, which closed Monday, were not disclosed. EarthLink executives were not immediately available for comment.

The acquisition will essentially undo EarthLink's June 2013 acquisition of CenterBeam, one of the original managed services pioneers, enabling the company, No. 31 on the CRN 2015 Solution Provider 500, to focus on its core networking and voice services. The portion of the business sold to Synoptek made up just 3.2 percent of EarthLink's $1.18 billion of overall sales in 2014.

"We believe the [EarthLink] business is performing strong currently, and we hope to see that continue and see it grow," Britt said.

Although both companies support large enterprises with robust data center offerings, Britt said EarthLink differentiates itself through expertise in virtual desktop infrastructure (VDI), while Synoptek has a unique integration support practice, enabling customers to safely use Apple desktops and mobile devices in corporate settings.

Synoptek will provide EarthLink's IT services business immediate back-office support, including human resources, finance and systems, as well as lend a hand with sales and marketing functions, as employees previously completing those functions will remain part of EarthLink.

EarthLink's operations will immediately be rebranded as Synoptek Elevate, Britt said, and will be run as a division of Synoptek for roughly a year to 18 months until Synoptek learns the business well enough to integrate service delivery functions.

Private equity giant Sverica Capital Management's acquisition of Synoptek in November provided the MSP with the financial backing needed to carry out the EarthLink deal, according to the company. Britt said Synoptek had been exploring buying EarthLink earlier in 2015, prompting the company to seek a private equity backer.

Synoptek will likely lie low for a little while after completing its sixth acquisition since 2012, but Britt expects the MSP to return to the M&A market once 2017 rolls around.

With 215 employees before the EarthLink deal, Synoptek said it was already the largest independent MSP in America, which will only be further solidified through the deal. The acquisition will add EarthLink's more than 1,700 IT services clients to Synoptek’s 400-customer base.