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One out of many
Series of deals plunges Presidio into
services market
By David Hubler
From the September 17, 2007 issue of Washington Technology
If it weren’t already taken, E pluribus unum
would be an appropriate motto for Presidio Inc., a newly minted
Greenbelt, Md., umbrella company created during the past 3 1/2 years
by equity-backed mergers and acquisitions.
Chief Executive Officer Joel Schleicher wanted to refashion Presidio
Corp., a value-added reseller (VAR), into an organization that could
provide a wide variety of information technology services to commercial,
federal and state government clients.
He envisioned a retooled company that would supply everything from
voice over IP, security, switching and routing, wireless, optical,
and managed services to refurbishing and reselling used telecommunications
equipment.
He secured an undisclosed amount of equity funding from a number
of leading investment firms, such as Columbia Capital, Oak Capital
Group LLC, Meritech Capital Partners and Halyard Capital, said Rudy
Casasola, president of the mid-Atlantic and federal division at
Presidio Networked Solutions.
In November 2004, Schleicher bought Ficomp Inc., of Philadelphia,
a Cisco Systems Inc. reseller that built corporate intranets.
He subsequently acquired Networked Information Systems Inc., of
Woburn, Mass., and Solarcom, of Norcross, Ga., and its affiliate,
Atlantix Global Systems. Together, NIS, Presidio Corp. and Solarcom
rebranded as Presidio Networked Solutions, with wholly owned subsidiary
Solarcom Capital handling leasing and financing arrangements.
Some press reports estimated the value of the deals at $800 million,
but Casasola declined to provide figures. “It was a good number,”
he said. “It gave us enough capital with which to do not just
acquisitions but to grow the business organically.”
Shifting sands
Schleicher’s acquisition activity may have been prompted by
what some analysts say is a significant shift in the IT sales channel,
with direct marketers stepping into the traditional territory of
the VARs. For example, last year CDW Inc. bought Berbee Information
Networks Inc., a Madison, Wis., VAR with more than 800 employees
and nearly $400 million in sales.
The deal gave CDW a door into the lucrative IT services market
and made the Vernon Hills, Ill., reseller a competitor of Schleicher’s
new Presidio Inc.
In April, Schleicher unveiled Presidio’s three business units:
Presidio Networked Solutions, a solutions provider focused on commercial
and government customers; Atlantix Global Systems, which buys and
refurbishes used IT products and then resells them; and Solarcom
Capital, to handle rental and leasing financing.
As a result of the acquisitions, Presidio Networked Solutions’
engineering staff grew to about 260 employees, and the company expects
to hire an additional 400 engineers and sales people in the next
few years, Casasola said.
The added financial strength and engineering capabilities have
already generated customer leads “that in the past probably
wouldn’t have come to us,” he said. But “the transition
from a VAR to a solutions provider is not easy,” said Mark
Amtower, principal at Amtower and Co. Presidio might shorten the
transition process by buying other companies, he said, but by retaining
the Presidio name, customers will still think of it as a VAR.
Amtower cited GTSI Inc.’s similar attempt at transformation
the past two years. “GTSI’s revenues are still largely
product-driven,” he said. “And Presidio has been around
as an 8(a) VAR since its inception in the mid-to-late 1980s.”
Still led by Schleicher, Presidio now bills itself as the nation’s
largest independent provider of advanced IT infrastructure solutions,
competing against the likes of GTSI, CDW and Apptis Inc.
Asked about competing against solutions providers such as GTSI,
he said, “I guess we still view them as a catalog company.
When you say solutions provider, to me that means a very heavily
based engineering organization.”
“We don’t consider ourselves a VAR,” Casasola
said. “We consider ourselves a value-added solutions provider.”
Amtower said Presidio’s transition differs from GTSI’s
because Presidio is doing it through acquisitions. “What they’re
not doing is letting some of the acquired companies retain their
name, and so they’re losing brand equity. If customers know
Presidio at all, it’s as an IT product supplier, not a solutions
provider. Changing customers’ minds is a slow process.”
But GTSI and Presidio share one feature, Amtower said. “The
migration into the services component puts them in a much more radically
competed arena.”
A winning approach
Presidio recently was named to the NASA Solutions for Enterprisewide
Procurement, a governmentwide acquisition contract for IT services.
“That’s a big win for us,” Casasola said. “We
invested heavily in a proposals and business development group to
go after some of these larger contracts, and we’re having
some good success on that front.”
Presidio Networked Solutions reported revenue growth of just over
20 percent per year during the past five years. A good portion of
that came from providing IT equipment and architecture, design,
implementation, and managed services to government clients such
as the Air Force; Navy; and the Homeland Security, Commerce and
Treasury departments.
The company is providing Treasury with public-key infrastructure
installations, which enable users on nonsecure public networks to
securely exchange data through a cryptographic key pair, Casasola
said.
“At Homeland Security, we’re providing bodies, on-site
support, program management, infrastructure, switches and routers,
and servers,” he said.
As commercial organizations and government entities increasingly
upgrade from the traditional time-division multiplexing technology
to VOIP, there is a need to take the old equipment out of service.
“That’s where our remarketing company, Atlantix, comes
into play,” Casasola said.
Atlantix buys and refurbishes old telecom equipment and then sells
it to customers that are not ready to switch to the new VOIP technology.
“There’s a big market for that,” he said. Presidio
Networked Solutions and Atlantix operate as separate entities “because
we don’t want to mix used with new.”
Solarcom Capital can provide rental and leasing funding as needed,
“so we can wrap the whole thing up in a very nice package
for the client,” Casasola said.
Although federal spending in 2006 shifted increasingly to the war
on terrorism and the Defense Department, “we did very well
as far as our federal business was concerned,” Casasola said,
adding that Presidio is exploring the idea of building a relationship
with Sun Microsystems Inc. for federal clients similar to its commercial
relationship with Sun. “We’re seeing a lot of uptick
in storage space.
We see a lot of growth there.”
Associate Editor David Hubler can be reached at dhubler@1105govinfo.com.
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