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FusionStorm CEO Dan Serpico's Seven Keys To Success For IT Service Providers

FusionStorm CEO Dan Serpico, who piloted the Solution Provider 500 powerhouse to a blockbuster acquisition by $5 billion European systems integrator Computacenter, says among the keys to success in a fast-changing IT service provider market are understanding the capital structure of the business and making calculated big bets to drive growth.

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Lessons Learned In The Channel Fast Lane

FusionStorm CEO Dan Serpico, who in seven years at the helm has helped drive the company’s sales from $300 million to a run rate of $1 billion in bookings, says one of the keys to the Computacenter acquisition of FusionStorm is the $45 million cash injection that comes as part of the deal to fuel continued FusionStorm sales growth.

The deal comes in the midst of a record-breaking year for FusionStorm, with sales up 55 percent. "At some point you need an equity base and a platform to support your growth," said Serpico. "With the Computacenter acquisition and the capital injection, FusionStorm is much better positioned for the future than we would have been by ourselves."

Computacenter's cash infusion is going to mean greater investments in IT services including cloud and managed services, said Serpico, a 30-year channel veteran who previously was president of Jeskell, a Laurel, Md., IT service provider.

"Computacenter's capital injection creates a massive opportunity for change," he said. "The timing is perfect given the inflection point in the market. FusionStorm needed a stronger balance sheet in order to move forward to continue the growth we expected to have."

Under the terms of the deal, Computacenter will pay FusionStorm $70 million when the deal is completed and up to $20 million deferred cash depending on the levels of EBITDA (earnings before interest, taxes, depreciation and amortization) and profits achieved by FusionStorm over a 15-month period.

Computacenter's $45 million cash infusion will be used to refinance existing credit facilities for San Francisco-based FusionStorm, which earned $3.9 million on sales of $595.5 million in 2017.

The blockbuster deal gives U.K.-based Computacenter a strong foothold in the U.S. market with the addition of the services muscle from FusionStorm.

The deal expands Computacenter's headcount in the U.S. by 50 percent and provides the ability for the IT service provider to offer a full range of services in the U.S. consistent with its European offerings. FusionStorm will be integrated into Computacenter's existing U.S. business.

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