MSP Incentra Continues VAR Acquisition Spree

Incentra this week acquired Tactix, a Portland, Ore.-based storage, networking and security solution provider, for $3.6 million in cash, subject to certain post-closing working capital adjustments.

Thomas Sweeney, chairman and CEO of Incentra, said the acquisition gives the Boulder, Colo.-based company a growing $12 million business with offices in Portland and Alaska. But more important, the Tactix deal brings Incentra a strong group of people headed by Brian Linse, president of Tactix, who's expected to stay with Incentra after the acquisition closes, Sweeney said.

Three years ago, an unprofitable Tactix was purchased by an investor who brought in Linse to turn the company around, a job he did very well, according to Sweeney said. "Brian will stay on with us," he said. "We feel he will eventually take on new responsibilities."

Incentra, one of the few survivors of the storage service provider (SSP) part of the dot-com era, currently manages about 1,500 Tbytes worldwide. That capacity is in place in data centers worldwide and managed from the company's network operating center in Boulder.

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The Tactix acquisition fits a pattern of Incentra's recent solution provider acquisitions, which are aimed at bringing managed storage services to more geographies by leveraging those companies hardware, software and services capabilities, Sweeney said.

"We're really buying their people and their customer base," he said. "To serve our clients, we provide a depth of conventional services -- [we] sell hardware and software, offer financial services to make our services act like a utility, and offer remote monitoring and management services."

Tactix is the fourth solution provider acquisition Incentra has made in two years. In April, the company acquired Lombard, Ill.-based NST, a $25 million, 300-customer VAR in the Chicago area, in a $25 million deal. And in March 2005, Incentra bought Kirkland, Wash.-based PWI Technologies, which followed the acquisition of Star Solutions, a San Diego-based solution provider, the prior month. The Star deal nearly doubled Incentra's revenue, company officials said.

Incentra's buying spree reflects a channel trend. Solution provider mergers and acquisitions accelerated this year as vendors, service providers and VARs look to beef up their channel expertise.

Sweeney declined to discuss whether Incentra was considering more acquisitions but said the company will continue to look for other businesses that add value. "We believe there are still a number of companies with the right fit," he said.

Incentra finds most of its acquisition possibilities using what Sweeney called a standard merger-and-acquisition method. This includes evaluating a set of solution providers for their technical and services capabilities, geographical reach, employee skills and owner's willingness to stay on after the acquisition. Tactix and NST were two of 117 solution providers that Incentra evaluated earlier this year, he said.

Incentra sometimes also will look at individual companies as the opportunities arise, according to Sweeney. "But we usually take a look at the whole market to see who has the best practices and the perfect fit," he said.

With Tactix, Incentra has rounded out its geographical coverage in the western United States, Sweeney said, adding that any future acquisitions would mainly be east of Chicago, from the Northeast to Florida and Texas.

Although most acquisitions have gone smoothly, Sweeney said that's not always the case. For instance, last year's acquisition of Star Solutions didn't meet Incentra's expectations, resulting in a claim against the former owner of the VAR and an eventual reduction in the price.

"But the nice part is, we got a strong base of employees and a good customer base," Sweeney said.