Avaya Channel M&A: Transcend United Buys RTS Networking Unit

VAR500 powerhouse Transcend United Technologies acquired the converged networking business unit of fellow solution provider Relational Technology Solutions, dramatically expanding Transcend's Avaya footprint and adding to its unified communications and managed services businesses.

The move is a sign of continued consolidation among major UC solution providers, particularly in the Avaya channel, where M&A activity has been rampant in the past three years.

Based in Columbus, Ohio, Relational Technology Solutions (RTS) is a Platinum Avaya partner but its vendor partnerships run the gamut from Cisco and EMC to Hewlett-Packard, Juniper, Microsoft, Riverbed and several other storage, wireless networking and UC players. Under the terms of the deal, whose financial terms weren't provided, Transcend is acquiring the majority of RTS, excluding RTS' server and storage businesses.

"We want to be the IT infrastructure provider of choice for our customers up and down the market, and Avaya has demonstrated some staying power in the 'S' part of the SMB space and strength in contact center," said Rick Hirsh, Transcend's CEO, in an interview with CRN.

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Hirsh said that customers need solution providers with well-defined "blue" and "red" strategies -- that is, knowledge of customers who were heritage Nortel or were heritage Avaya, respectively, and are adjusting to a combined landscape following Avaya's 2009 acquisition of Nortel's former enterprise unit.

"RTS had a lot of core strength on the red side, and in contact center," Hirsh explained. "The geography also fits in and covers some of our white space on the national map. They had strong technical innovation and a strong selling organization. We like the fit."

Ranked No. 374 on CRN's 2011 VAR500 listing, Springfield, Pa.-based Transcend was itself the result of M&A, created in February 2010 following the 2009 merger of Fastech Integrated Solutions, Aserdiv, Ixillix and Transcend Communications. The company merged with another solution provider, Spectrum Solutions, in November 2010, and in May 2011 bought fellow UC-focused solution provider LiquidSpoke.

The RTS move expands Transcend's footprint into new markets such as the Southeast and California. Transcend picks up a few new vendor relationships as well, such as with cloud-based UC and contact center specialist Interactive Intelligence, and smaller vendors well-known to the Avaya ecosystem, such as Sonus Networks, AudioCodes and Acme Packet.

Its status with several vendors also elevates -- Transcend is now a Platinum Avaya partner, up from Gold, and an Elite Meru Networks partner for wireless LAN, among others. Buying RTS' assets also makes Transcend a member of Avaya DevConnect, Avaya's program for offering APIs, SDKs and developer resources for Avaya products.

That's important, noted Rich Tarity, Transcend's executive vice president of sales and marketing, as Transcend further expands into app development and software integration. With the LiquidSpoke acquisition, for example, Transcend picked up software elements such as middleware for tying customer databases to phone systems for capabilities such as screen pops. App devevlopment is a big area of investment for Transcend, he said.

"A lot of that will differentiate us vs. the largest Avaya partners," Tarity explained.

Transcend remains on the hunt for other acquisitions, Hirsh said, noting that the company is experienced with successful solution provider integration.

"This will be our fifth deal, and we've got room to do some more," he said.

In a statement e-mailed to CRN, Karl Soderlund, Avaya vice president, U.S. channel sales, gave a thumbs-up to the acquisition.

"The combination of Transcend United and RTS creates a strong, highly skilled organization as demonstrated by their numerous certifications across all Avaya product lines and support," Soderlund said. "In choosing Avaya as their premier communications vendor for serving customers both large and small, Transcend is well positioned to grow their business as an Avaya Connect U.S. Platinum Partner."

Investment banking firm Q Advisors advised Transcend United during the transaction.