Building A Platform Company
When H.I.G. Capital made its first foray into the channel with the acquisition of 80 percent of General Datatech, the Dallas-based solution provider more commonly known as GDT, it was looking beyond the company’s $1.2 billion in revenue and its strong services capabilities. Instead, like so many other private equity companies in the past couple of years, it looked at the possibility of rolling up smaller solution providers and building an industry-leading titan from what has been and remains a very fractured community of smaller solution providers.
Using GDT to roll up other acquisitions was the intent from the start, GDT CEO Tom Ducatelli told CRN in an exclusive interview. It is a move that despite all the consolidation that has gone on so far still offers investors and their chosen solution provider partners big opportunities, Ducatelli said. “For those [solution providers] who are not, or are not interested in, investing additional funds, the best way for them to migrate their business, put it in the hands of a growth-oriented business, protect their people, and find a fairly valued transaction, it’s going be through M&A activity,” he said.
There’s a lot of M&A going on in the channel, and the acquisition of 80 percent of GDT by H.I.G. is indicative of the trend. Here is more on how Ducatelli sees the channel investment environment, and why he thinks the changes are happening now.