CDW’s CEO: 6 Reasons Why Sirius Acquisition Is A ‘Home Run’

From a potential “upsell” in client sales to adding $400 million in new services revenue, CDW’s CEO Christine Leahy explains why buying Sirius Computer Solutions is a “home run.”

Why Sirius Is A ‘Home Run’ For CDW

CDW’s $2.5 billion acquisition of fellow solution provider superstar Sirius Computer Solutions is a “home run” that will lead to CDW winning more market share across the U.S., according to CDW’s top executive.

“Today’s announcement is a home run across all four of our key criteria,” said Christine Leahy, president and CEO of CDW, during a conference call with financial analysts today.

“Sirius further balances our portfolio. It’s expected to be immediately accretive and strengthened our financial profile. And it’s expected to have strong cash flow to support our capital allocation priority,” she said. “And most importantly, it is going to help us serve our customers better than anyone and be that trusted advisor that has the breadth, the depth, the skill, and the expertise to deliver customer-centric outcomes and speed to return-on-investment.”

The $20 billion Vernon Hills, Ill.-based solution provider unveiled plans today to acquire San Antonio, Texas-based Sirius for $2.5 billion for a wide variety of growth and technical capabilities. The all-cash deal is expected to close in December.

From a potential “upsell” in client sales to adding $400 million in new services revenue, CDW’s President and CEO Leahy explains why buying Sirius Computer Solutions is a home run.

‘Upsell’ Client Sales Surge Potentially Ahead

Sirius Computer Solutions does not sell client products and services, but mostly data center and networking solutions. Leahy said CDW has witnessed an “enormous demand” for client products like PCs during the COVID-19 global pandemic.

“They don’t sell into that space, but that just provides an opportunity for CDW and their customers. Then you think about our 250,000 customers in services capabilities, in particular, that we can now sell into our very large customer base to create greater reach and depth in the customer—we’re really excited about that,” she said.

PC sales have skyrocketed over the past 19 months as the pandemic has created a new remote workforce with potential ongoing opportunities for remote working and learning across a broad set of industries.

“Sirius does not sell client. So there’s an obvious opportunity there to upsell,” Leahy said.

Sirius ‘Adds Scale’ Including $400 Million To Services

Leahy said Sirius brings additional IT services and technical scale to CDW, which are key competitive advantages CDW has over others.

“Sirius will increase the scale of our services portfolio, taking our approximately $900 million annual net revenue in 2020, to approximately $1.3 billion in combined annual sales,” said Leahy. “[This represents] an increase of 45 percent--a meaningful increase that will impact our portfolio.”

Strategically, Leahy said Sirius accelerates services and solutions capabilities, and adds scale to its services portfolio.

“Services is a fast-growing area of the market. And we would expect to grow at least as fast as a market, if not more quickly to take share,” she said. “At CDW, it always begins with the customer: where they are, where they’re going, and what they need to get there. Today, organizations are dramatically accelerating the digital transformation initiatives. This acceleration requires greater service capabilities be integrated into their IP ecosystem.”

1,500 New Technical Employees To CDW’s Deep Bench

Sirius’ more than 2,600 employees are set to join CDW’s 10,500-strong workforce. However, Leahy touted that more than half of Sirius’ employees are technical, holding over 5,500 IT professional and technical certificates.

“Specifically, Sirius brings 1,500 highly certified technical coworkers with deep technical expertise,” she said. “This would increase CDW’s total technical coworkers by over 45 percent to 4,700 strong—a meaningful increase in today’s competitive market for IT talent.”

With sales of over $2 billion in 2020, Sirius holds more than 5,500 technical certifications with specialties in security, cloud, digital infrastructure and managed services.

3,900 Cross-Selling Opportunities

CDW and Sirius serve complementary customers and markets across the country, with cross-selling opportunities ahead around Sirius’ 3,900 customer base.

“Currently, [Sirius’ customer] mix includes corporate, healthcare, and government and education, which matches well with our profile. These 3,900 customers represent excellent potential for cross sell,” said Leahy.

Leahy said CDW serves SMBs customers to the largest enterprises in the world.

“We see Sirius’ portfolio of customers is very complementary. We certainly have some customers that we both served in a large business space,” she said. “But again, it appears that we’re selling different things into the customers, and we have opportunities to work together as a cohesive team to broaden our reach and depth into the customer.”

Sirius’ Management Team Will Be Retained

Sirius Computer Solutions President and CEO Joe Mertens (pictured) will not only join CDW, but remain inside the company for several years.

“Joe is [going to be] with CDW for several years. He’s made that commitment. A number of his top leaders have committed to a transmission and potentially longer term,” said Leahy.

CDW’s CEO said Sirius has an executive team of “phenomenal leaders” across the board, many of which will stay with CDW after the deal closes and through integration.

“What we plan to do is make sure we’ve got the right people, in the right places, to support and serve our customers and the right way. But I just want to emphasize that [Sirius’] top team is committed to being here through integration, and potentially beyond which we’re really excited about,” said Leahy.

Sirius Strengthens CDW ‘Trusted Advisor’ Role And Market Coverage

Overall, Leahy said Sirius makes CDW an even more trusted advisor to its more than 250,000 customers on a worldwide basis.

“The bottom line is that the addition of Sirius strengthens our role as a trusted advisor,” she said. “They help ensure we remain the advisor with the portfolio of breadth, depth, and scale and expertise our customers need in today’s challenging environments. An advisor who can first determine which technology solutions are best suited for our customer specific challenges. Second, successfully implement and integrate those technologies as an optimally performing, cohesive solution. And third, deliver the customer’s desired outcomes and provide the fastest return on their investment. So you can see why added Sirius capabilities to our solutions that make strategic sense.”

She said Sirius brings additional national sales and technical coverage across the U.S. with a services-led approach in its 40 offices across the country.

“Like CWD, Sirius has a culture of putting the customer-first. Sirius’s top 200 customers have an impressive 9-plus year average tenure, and its overall customer satisfaction rating is 9.3 out of 10,” she said. “Sirius has grown to be one of the largest and most well-regarded IT solution integrators in North America. They focus on four IT key growth areas: hybrid infrastructure, security, digital and data innovation, and cloud managed services. They are a consultative solution provider across the full ecosystem of leading and emerging vendors. … Today’s announcement is a home run across all four of our key criteria. This transaction is expected to create value for all of our stakeholders, our customers, coworkers, partners, communities, and investors.”