Collaboration Technology Star ConvergeOne, Valued At $1.2B, Set To Go Public In 2018 Following Merger


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ConvergeOne has embraced an aggressive expansion strategy since its acquisition by Clearlake Capital Group in 2014. The next step on that path will see the fast-growing IT services provider become a publicly-traded company.

On Friday, the Eagan, Minn.-based IT services giant announced a definitive agreement with special-purpose acquisition company Forum Merger Corp. that paves the way for ConvergeOne to join the Nasdaq at an estimated valuation of $1.2 billion. The combined company will retain the ConvergeOne name under the continued leadership of chairman and CEO John McKenna.

"With access to new sources of capital and liquidity, ConvergeOne will be able to address the complex collaboration challenges of large and global companies better than ever before," McKenna said in a statement.

[Related: ConvergeOne Breaks $1B Revenue Barrier With Purchase Of Avaya, Cisco Powerhouse SPS]

The deal, which has been approved by ConvergeOne and Forum Merger board members, is expected to close in the first quarter of 2018. Clearlake will remain the largest shareholder in the company following the merger.

A special purpose acquisition company, sometimes called a "blank check" company, is a business entity with financial backing established with the specific purpose of making an acquisition.

ConvergeOne will be the latest of several major solution providers to go public in recent years. New York-based Presidio completed an IPO in early 2017, while powerhouse CDW went public in 2013. Security solution provider Optiv nearly joined that group, filing a registration statement with the U.S. Securities and Exchange Commission, but was ultimately bought by private equity firm KKR.

ConvergeOne has kept busy on the acquisition front in recent years, acquiring and integrating 12 different solution providers since 2009. The acquisition spree has most recently included the $300 million networking MSP Strategic Products and Services (SPS) – No. 74 on the CRN Solution Provider 500 – in August, Cisco gold partner Annese and California powerhouse Sigmanet.

As part of the announcement, ConvergeOne outlined its intent to place significant focus on the double-digit growth collaboration market. Specifically, the company sees a wide swath of businesses looking toward the cloud to reduce their capital expenditures around collaboration.

For the fiscal year 2018, ConvergeOne projects collaboration sales of $834 million, which would account for 69 percent of total revenue. Collaboration services revenue is estimated at $523 million for that timeframe.

Company leadership also noted significant cross-selling opportunities among its managed services, cloud and security practices. Managed, cloud and maintenance services are projected to generate $394 million in fiscal year 2017, which would be an increase of 68 percent over last year's performance.

ConvergeOne's existing customers include more than half of the Fortune 100 and 42 percent of the Fortune 500. A valuation of $1.2 billion would make it one of the larger companies on the CRN Solution Provider 500.

"The caliber of their client base and the number of long-standing and expanding relationships they maintain with these blue-chip customers is a testament to the quality of ConvergeOne's offerings," Stephen Vogel, executive chairman of Forum Merger, said in a statement.

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