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MSP Synoptek Preps For Growth With Quad-C Private Equity Win
Joseph F. Kovar
‘We went with no outside capital for 10 years, during which we grew to $20 million. But with capital from private equity, seven or eight years later we grew by six or seven times. Outside investors take so much pressure off. You can still make the decisions. The PE firms trust you. They invest in you because of your track record. Also, to grow, you need to attract the best people. You need the capital,’ says Tim Britt, Synoptek CEO and founder.
Synoptek, a solution provider and MSP with a broad suite of business IT and digital transformation services, this week said it has received new investment from private equity to help it continue to grow its business going forward.
Quad-C Management, a Charlottesville, Va.-based mid-market private equity firm, has acquired a majority stake in Irvine, Calif.-based Synoptek. It is the second private equity firm to invest in Synoptek following two investments in late 2015 and early 2016 by Boston-based Sverica Capital Management. Sverica and the Synoptek management team both retain significant shares in the company as well, said Tim Britt, Synoptek CEO and founder.
The new funding from Quad-C will help Synoptek move into its next stage of growth, Britt (pictured) told CRN.
“Under Sverica, we transitioned our portfolio to cloud platforms,” he said. “Under Quad-C we will leverage those platforms to grow.”
Synoptek works primarily with midsize business customers with between 500 and 2,500 people, Britt said.
“We’re like Accenture, but for the midsize enterprise,” he said.
In addition to a significant managed services focus, Synoptek also provides cloud, traditional infrastructure, and systems integration with business analytics and software development services to clients, Britt said. “We also provide complete IT outsourcing for many customers,” he said.
Synoptek initially was formed in 2005 after three IT consulting firms joined to form a new venture. It entered the managed services market with its 2013 acquisition of the managed services business of San Francisco-based FusionStorm. In its most recent acquisition, Synoptek in May acquired Macquarium, a customer experience agency.
For Synoptek, ranked no. 134 on the CRN 2022 Solution Provider 500 list of channel partners, investment from private equity companies like Sverica and Quad-C have been key to growth, Britt said.
When Sverica invested in Synoptek, the solution provider had annual revenue of $45 million but has since grown that to $130 million, thanks to acquisitions made possible because of the investment, he said
“Also, in late 2015, we had a small Azure management business,” he said. “After the Sverica investment, we double-downed on the cloud, and now have strong partnerships with Azure, AWS, Salesforce, and ServiceNow. Today, 60 percent of our revenue comes from deploying, implementing, and managing these major cloud platforms.”
Synoptek has made nine or ten material acquisitions and also picked up a few of what Britt called “acqui-hires,” which he said are companies that were too small to successfully go to market and instead looked to merge with Synoptek.
More acquisitions are expected for Synoptek, Britt said.
When considering an acquisition, Synoptek looks at a company’s industry capabilities. “We believe that as we grow, we will need more industry-vertical expertise,” he said. “And one way to look for that vertical expertise is via acquisitions.”
Synoptek also looks at potential acquirees’ technical capabilities, Britt said.
“As we’re expanding, we don’t always have the capabilities customers require,” he said. “For instance, we recently acquired a ServiceNow practice. Our customers needed ServiceNow, but we couldn’t build the practice fast enough on our own.”
That ServiceNow channel partner, Rapid Technologies, was acquired by Synoptek in December.
While some solution providers have grown and made acquisitions while avoiding private equity funding for fear of losing control of their destiny, Britt said Synoptek has wholeheartedly embraced private equity for giving it the ability to grow.
“We went with no outside capital for 10 years, during which we grew to $20 million,” he said. “But with capital from private equity, seven or eight years later we grew by six or seven times. Outside investors take so much pressure off. You can still make the decisions. The PE firms trust you. They invest in you because of your track record. Also, to grow, you need to attract the best people. You need the capital.”
Britt said it is hard to imagine where Synoptek would be without outside investors.
“If we hadn’t got the investment, we might have grown to a point where we could get sold,” he said. “But now, someday when I leave the company, we will have a lot of people here invested in the future of the business.”