Running your business News
Joseph F. Kovar
‘We went without outside capital for 10 years, where we grew to $20 million. But with capital from private equity, after seven or eight years we grew six or seven times. Outside investors take a lot of pressure off. You can still make the decisions. 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,’ said Tim Britt, CEO and founder of Synoptek.
Synoptek, a solutions provider and MSP with a wide range of business IT services and digital transformation, this week said it has received a new investment from private equity to help it continue to grow its business in the future .
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 stakes in the company, said Tim Britt, Synoptek CEO and founder.
The new funding from Quad-C will help Synoptek move into its next phase of growth, Britt (pictured) told CRN.
[Related: MSPs And Private Equity: What Makes An MSP Stand Out From The Pack?]
“Under Sverica, we moved our portfolio to cloud platforms,” he said. “Under Quad-C, we will use those platforms to grow.”
Synoptek primarily works with midsize business customers with between 500 and 2,500 people, Britt said.
“We’re like Accenture, but for midsize businesses,” he says.
In addition to a significant managed services focus, Synoptek also provides cloud, traditional infrastructure, and system integration business analytics and software development services to clients, Britt said. “We also provide complete IT outsourcing for many customers,” he said.
Synoptek was first formed in 2005 after joining three IT consulting firms to form a new venture. It entered the managed services market with its 2013 acquisition of San Francisco-based FusionStorm’s managed services business. In its most recent acquisition, Synoptek in May acquired Macquarium, a customer experience agency.
For Synoptek, the ranking no. 134 on the CRN 2022 Solution Provider 500 list of channel partners, investment from private equity firms like Sverica and Quad-C has been key to growth, Britt said.
When Sverica invested in Synoptek, the solutions provider had annual revenue of $45 million but that has since grown to $130 million, thanks to acquisitions made possible by the investment, he said.
“Also, in late 2015, we had a small Azure management business,” he said. “After investing in Sverica, we doubled-down 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 10 material acquisitions and also picked up some of what Britt calls “acqui-hires,” which he says are companies that are too small to successfully go to market and instead look 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 find vertical expertise is through acquisitions.”
Synoptek is also looking at the technical capabilities of potential acquirers, Britt said.
“As we expand, we don’t always have the capabilities that customers need,” he said. “For example, we recently acquired a ServiceNow practice. Our customers need ServiceNow, but we can’t get the training up to speed 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 wholeheartedly embraced private equity for giving it the ability grow.
“We went without outside capital for 10 years, where we grew to $20 million,” he said. “But with capital from private equity, after seven or eight years we’ve grown six or seven times. Outside investors take a lot of pressure off. You can still make the decisions. People trust you. PE firm. They invest in you because of your track record. Also, to grow, you have to attract the best people. You need capital.”
Britt said it’s hard to imagine where Synoptek would be without outside investors.
“If we hadn’t gotten the investment, we might have grown to a point where we could have sold,” he said. “But now, one day when I leave the company, we’ll have a lot of people here who are invested in the future of the business.”
Joseph F. Kovar