ConvergeOne: Alleged Fraud Complicates $1.2 Billion Debt Efforts
ConvergeOne, acquired by private equity firm CVC Fund in late 2018, is facing an $11 million inventory writedown after discovering that an employee may have committed fraud, Bloomberg reports. The potential fraud comes at a delicate time for lenders backing the massive technology solutions provider and MSP.
Those lenders are working to sell $1.2 billion worth of debt tied to the deal. But both Deutsche Bank and UBS Group are struggling to sell the ConvergeOne debt, and potential investors are using the potential fraud as leverage to pursue steeper discounts, the Bloomberg report says.
ChannelE2E has not independently confirmed the report. We’ve reached out to ConvergedOne for comment and will update this article if/when we have more information to share.
Private Equity Firm CVC Acquires ConvergeOne: The Background
CVC Fund VII in November 2018 announced plans to acquire ConvergeOne for $1.8 billion. Under terms of the deal, ConvergeOne will maintain its corporate headquarters in Eagan, Minnesota and continues to be led by its current executive team.
ConvergeOne has been an active acquirer in the IT services market. Key acquisitions have included:
- December 2018: Cisco Partner Venture Technologies
- October 2018: Advantel Networks
- February 2018: Arrow Electronics’ systems integration business
- December 2017: Alexander Open Systems (AOS)
- August 2017: Strategic Products and Services (SPS)
- July 2017: Annese & Associates
- December 2015: SIGMAnet
ConvergeOne serves more than 10,400 customers, including 62 percent of the Fortune 100 and 48 percent of the Fortune 500 customers across the healthcare, finance, manufacturing, education, and energy industries, the company says.