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CompassMSP Acquires IT Direct, Gets CEO In The Process

“We’re focused on building a world-class MSP. We not looking at growth for growth’s sake, but we’re driving growth for the value it provides for clients. We’re looking for like-minded MSPs who focus on quality. For tuck-in acquisitions to fit the markets we are in and bigger acquisitions to grow. We anticipate making acquisitions nationwide,” says CompassMSP CEO Ari Santiago.

Managed services provider CompassMSP has acquired fellow MSP IT Direct, and in the process landed a new CEO.

CompassMSP acquired West Hartford, Conn.-based IT Direct for an undisclosed sum, and promptly unveiled IT Direct’s founder and CEO Ari Santiago as CompassMSP’s new CEO. The company also moved its headquarters from Jacksonville, Fla. to IT Direct’s West Hartford office, Santiago told CRN.

CompassMSP’s former interim CEO, Josh Kotler, has moved to become the MSP’s chief strategy and head of acquisitions. Kotler has run CompassMSP since Tom Praschak, the MSP’s former president and CEO, stepped down in September to become the company’s senior vice president of central operations.

[Related: Selling An MSP Business? Here’s Everything You Should Know]

CompassMSP is a member of the Pioneer 250 of CRN’s 2020 Managed Service Provider 500.

The acquisition of IT Direct gave CompassMSP the opportunity to expand its geographical reach into the Northeastern U.S. Prior to the acquisition, the company had a presence in Miami and Jacksonville Florida, New Jersey, Wisconsin, and Chicago, Santiago said.

CompassMSP has expertise in the financial, legal, medical, and manufacturing verticals, and while heavily invested in organic growth, it is looking to make strategic acquisitions where needed, he said.

“We’re focused on building a world-class MSP,” he said. “We are not looking at growth for growth’s sake, but we’re driving growth for the value it provides for clients. We’re looking for like-minded MSPs who focus on quality. For tuck-in acquisitions to fit the markets we are in and bigger acquisitions to grow. We anticipate making acquisitions nationwide.”

Santiago said conversations with CompassMSP to hire him as CEO started before they moved on to the possibility of acquiring IT Direct.

“I knew the guys at CompassMSP from the beginning,” he said. “They were looking for change. I laid out my vision. I’m bringing in operational expertise to develop that vision, and combining it with their financial expertise. Ultimately, it’s about the right alignment.”

CompassMSP funded the acquisition of IT Direct in partnership with Route 2 Capital Partners, which owns the MSP, along with support from a Connecticut bank, Santiago said. The company is not private equity-backed, he said.

“A lot of companies are private equity-backed,” he said. “But that’s typically five to seven years of funding, with a relationship built to transact. Our funding structure is totally different. We’re not under that pressure. This lets us focus on our clients and on quality growth, not on a short-term exit strategy.”

CompassMSP is continuing to look to acquire other MSPs looking to build a great business and not just for the money, Santiago said.

At the same time, the company is approached as an acquisition target, he said.

“People are approaching everyone about everything,” he said. “We’re no different from the others. But getting acquired is not on our roadmap. It’s not in our plans at all.”

The year 2021 looks to be a good one for CompassMSP and for the MSP business overall as the country recovers from the COVID-19 coronavirus pandemic, Santiago said.

“The winds are at our back,” he said. “The pandemic only helped heighten business’ need for well-run IT. Not just to get Zoom running, but for things like increased cybersecurity. Businesses know they need to manage risk better, and they need technology to compete in any industry. And I see that continuing into the future.”

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