Harbor IT Acquires Zag And New England Network Solutions In Big Regulatory, Compliance Push

‘[We serve] industries that require true expertise from the MSPs’ perspective of cybersecurity and compliance. We want to be the best at things like HIPAA and CMMC (cyber security maturity model), and the companies we [acquire] have all been focused on building up that capability,’ says Harbor IT CEO Johnny Lieberman.

Managed services provider and platform MSP Harbor IT Monday unveiled the acquisition of Zag, an MSP focused on the agriculture industry.

The acquisition follows a similar move just one month ago to acquire New England Network Solutions, which brands itself as NENS, in a bid to expand its healthcare regulatory and compliance capabilities.

New York-based Harbor IT is a national IT managed services provider looking to become a one-stop shop for services, said CEO Johnny Lieberman (pictured).

“We’ve been very intentional about developing a broad swath of capabilities across IT services so that we can go to even an SMB or an upper SMB customer and be the one vendor they go to for their IT needs,” Lieberman told CRN.

The company is also a platform MSP owned by New York-based Worklyn Partners, a holding company focused on investing in cybersecurity and IT companies, said Lieberman who is also a co-founder of Worklyn Partners. Worklyn Partners also owns Jacksonville, Fla.-based managed detection and response and enterprise security services provider Quadrant Information Security.

Harbor IT has grown both organically and via acquiring nine other MSPs, including NENS and Zag. With its most recent acquisition, Harbor IT now has over 300 employees, he said.

Harbor IT’s primary business focus is on high-growth regulated industries including life sciences, transportation, agriculture, financial services, manufacturing, and private equity, Lieberman said.

“These are all industries that require true expertise from the MSPs’ perspective of cybersecurity and compliance,” he said. “We want to be the best at things like HIPAA and CMMC (cyber security maturity model), and the companies we [acquire] have all been focused on building up that capability.”

The first acquisition, unveiled in November, was that of New England Network Solutions, a Lowell, Mass.-based MSP serving regulated sectors including healthcare and life sciences with cybersecurity and compliance capabilities including HIPAA and CMMC.

Harbor IT met the NENS leadership team almost two years ago, and since then got to know the team and its organization, Lieberman said.

“Harbor IT has built a concentration in the New England area as well as other regions in the United States, but New England is one of our core focuses,” he said. “New England Network Solutions has long been known as a crown jewel in the region, with an extremely strong reputation, both the company as well as its principals. I’d heard through our network, and just being in the region, that they really are the best at what they do. So it was a long partnership in the making.”

NENS is an ideal fit for Harbor IT, Lieberman said.

“They are experts in high-growth regulated industries,” he said. “Their specific focus is on healthcare and life sciences. They have a ton of expertise in HIPAA and CMMC, and I think over the course of their 30-year growth, where they have grown exponentially, they’ve done that with values that really align with ours, which at the end of the day is, is serving the client or the customer within intimacy at scale.”

By “intimacy at scale,” Lieberman said SMB businesses are used to their MSPs having a very close, tight-knit relationship with them.

“They know the engineers, they know the environment, and that’s what builds the trust,” he said. “As we build out a national organization, we want to maintain that intimacy, but adding the capabilities that a larger organization can serve. NENS has really leaned into that. Together, we create an organization that understands how to keep that intimacy while being able to offer our clients products and services that are beyond traditional managed services, things like managed cloud, managed infrastructure, managed cyber, and managed IT, which is the core of our business.”

With NENS, Harbor IT gets a top-notch, deep bench of talent that bring incremental expertise in HIPAA that will be extremely valuable for the platform, Lieberman said.

Lieberman declined to discuss the cost of the acquisition. However, it said NENS was a profitable company.

NENS was not shopping itself, he said.

The second acquisition, that of San Jose, Calif.-based Zag Technical Services, brings Harbor IT a business that specializes in providing managed IT services to the agricultural industry, particularly in the fresh produce space, said Zag CEO Eric Regnier.

Regnier, who will become Harbor IT’s chief services officer now that the acquisition was closed as of Monday, told CRN the majority of his company’s clients have their center of gravity in California’s Salinas Valley, with manufacturing facilities across the country and internationally.

“Over the course of being in the trenches with the clients, day in and day out, for the last two decades, we’ve developed a deep expertise for what it takes to deliver managed services and professional services in the ag space, specifically ag manufacturing, the label printing, the food traceability, all the unique elements of this portion of the industry,” he said. “We’re excited to join Harbor and together double down on the vertical to take advantage of a broader service portfolio through this larger team and larger platform that we’re joining.”

Zag was founded with a focus on the impact and the sense of mission that companies in the agriculture space have in securing the nation’s food supply, Regnier said.

“A lot of the folks that work at Zag are focused on the community, and are united in a mission, a larger purpose, day in and day out to protect the nation’s food supply,” he said. “We view ourselves as a part of America’s critical infrastructure, and work to put food on peoples’ plates and to support members of the community that help in that process.”

Zag has a nationwide client base, particularly with clients specifically in leafy greens, but has clients working all manner of fruits and vegetables, Regnier said.

Zag did not set out looking to be acquired, Regnier said.

“We’ve never been in the market to get acquired, but in the natural course of business, we came to meet some of the leaders within Harbor IT, and we learned about the vision for the national platform they’re building, their own mission and priorities, and their dedication to client success and enabling opportunities for their employee base. We had a really strong connection to the ethos of the leaders at Harbor and their dedication to building this national platform. And for me personally, they showed a vision for a better together mindset for this larger platform and the opportunity to take advantage of deeper resource pools and a broader service catalog and product portfolio than I could offer my clients myself.”

Regnier said he had several product and services initiatives planned for the next two to four years that, as part of Harbor IT, can now be done in the next couple quarters.

“It’s really a compelling opportunity for us to take part in this larger movement, this larger platform Harbor is building,” he said. “Getting acquired is not something we set out to do, not part of our plan. But sometimes, when a good thing comes along, you know it when you see it, and that’s where we are today.”

Zag got to first know Harbor IT because of a service ticketing upgrade requirement, Regnier said. Zag’s CTO was discussing a ticketing upgrade with a Harbor IT executive, and shared his experience with Harbor. That conversation, he said, ignited the larger conversation about the mission, purpose, and platform Harbor IT is building, which led to more connections between the organizations.

Zag itself has never made an acquisition, but instead has grown organically, he said.

Because of the acquisition by Harbor IT, Zag now gets access to Harbor’s service deliver structure which forms “pods” that bring several employees together as a team focusing on a customer, Regnier said.

“The employees work as a team to continue the personal touch customers have been used to experiencing but which is now empowered by this larger organization that allows us provide the best of both worlds: the boutique IT firm and the intimacy at scale, but with the larger resource pool behind them,” he said.

Going forward, Zag also gets access to Harbor IT’s in-house SOC (security operations center) and MDR (managed detection and response) service, Regnier said.

“That allows me to develop a service offering between the security operations center and the IT technicians that need to work hand-in-glove with clients to have a truly optimized security service offering,” he said. “Today, I have to reach out to a constellation of vendors for those services and retrain folks to interact with each of those different service providers. There’s an element of inefficiency there. With Harbor, we’ll have that teamwork to deliver a more optimized security offering.”

With Zag, Harbor IT gets its first deep connection to the agriculture business, although there is already a lot of commonalities with what Harbor IT already does, Regnier said.

“When we say ag, a lot of times people think farmers out in the fields,” he said. “There’s certainly some component of that, and we deal with IT and tech in the field: tablets, mobile devices, those types of things. But really what we’re talking about is process and manufacturing. It’s the plant floor, receiving raw goods, transforming them to finished product, inventory and warehousing, preparing to ship, and all the technologies that go into it. In that space, there are other portions of the business that touch on that tangentially. [Zag’s ag focus] will also be able to cross-pollinate into other pods such as oil and gas critical infrastructure to deepen the overall bench together.”

Regnier declined to discuss the terms of the acquisition, which actually closed in September.

Harbor IT chief financial officer Hannah Paige told CRN that what Harbor IT is building is unique, and that it is doubling down with the acquisition of Zag in serving critical infrastructure and hard-to-serve industries.

“Think ag, SLED, airports, oil and gas,” Paige said. “They’re all at the intersection of IT and OT. I think we really have the deep technical expertise to serve those industries in a way that’s different than how other MSPs out there do it.”