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Vertical Market MSP Acquisition: Abacus Group Buys Proactive Technologies

Abacus Group has acquired Proactive Technologies. The deal unites two highly respected MSPs that have deep expertise in a key slice of the financial services vertical market: Alternative investment firms (i.e., hedge funds). Financial terms were not disclosed.

Proactive has roughly 120 customers, mostly in New York. Abacus Group has roughly 400 customers across the US and the UK. For 2018, Abacus Group and Proactive Technologies generated 23 percent and 18 percent year-over-year revenue growth, respectively, the companies say. Actual revenue figures and profit figures were not disclosed.

Post-deal, Abacus now has roughly 170 employees and claims to be the largest MSP specializing in alternative investments in the New York metropolitan area.

Abacus Group Acquires Proactive Technologies: Behind the Deal

Abacus Group and Proactive Technologies are quite familiar to one another. The companies have both competed and cooperated on multiple deals — particularly engagements in New York. The executive teams have known each other for numerous years, and mutual trust between the executive teams was strong even before this deal, according to ChannelE2E interviews.

Proactive Technologies President Jacob Cane

Proactive Technologies COO Dave Cava

Abacus Group CEO Chris Grandi

“We have very similar companies in terms of culture and business focus,” says Chris Grandi, co-founder and CEO of Abacus. “We’ve competed. We’ve grown. They’ve grown. They’ve impressed us with the level of service they deliver.”

The feeling is mutual at Proactive Technologies, co-founded by Dave Cava and Jacob Cane. Although the two MSPs have certainly competed, they also fed business leads to each other and maintained a cordial relationship, says Cava, COO of Proactive Technologies.

“Why do a deal with Abacus? That’s an easy question to answer,” says Cava. “We had tremendous respect and even affection for them. I can’t overstate it. If there was anyone to connect with [in an M&A deal], Jacob and I said the answer is Abacus. From their platform to their level of service to the personality and culture of the firm, it all impressed us. We’re thrilled about the culture and business fit.”

Abacus Group Acquires Proactive Technologies: Timing and Business Integration

Proactive Technologies has grown to about 50 employees, and has attracted potential buyers multiple times over the past few years, ChannelE2E believes. So why sell the business now — rather than a few years ago, or sometime down the road?

“We were at an inflection point in the business,” Cava says. “We’ve scaled to a point where we’ll eventually need to complete additional compliance and certification requirements. We’d also have to build out the management team. It’s easier to move forward and scale with Abacus than to move forward on our own.”

Looking ahead, the big priority is all about the people, Grandi and Cava say. Abacus communicated the M&A news to employees last week — roughly a week before the deal was publicly announced today.

Notes Grandi: “When you go through M&A, you want to make sure you know every employee’s name. Communication is so critical. We have to make sure each employee feels warm and welcomed.”

Adds Cava: “This is a people business — both in terms of the employees and our clientele. The people come before the technology. If you get the technology right and the people wrong, you’ll fail.”

M&A Experience: This is Abacus Group’s third acquisition. The earlier deals were smaller tuck-in acquisitions, according to Grandi.

Abacus Group Acquires Proactive Technologies: Business Highlights

In a prepared statement, Abacus pointed to these various business factoids…

1. Headcount and Offices:

  • Abacus has more than 125 employees across eight offices, in New York, NY; San Francisco, CA; Boston, MA; Dallas, TX; Greenwich, CT; Los Angeles, CA; Charlotte, NC; and London, England.
  • Proactive has more than 45 employees, the majority of whom are New York-based and will move into Abacus’ newly renovated headquarters in midtown Manhattan.

2. Executive Transitions:

  • Jacob Cane, president and co-founder of Proactive, and Dave Cava, COO and co-founder of Proactive, have joined Abacus’ leadership team as Managing Directors, and will assist with facilitating the integration of Proactive’s employees and clients into Abacus’ systems over the next nine to 12 months, the company says.

3. Technology Services:

  • Proactive clients will eventually leverage the Abacus Cloud platform, including a hosted voice service, application hosting, 24×7 helpdesk, dedicated cybersecurity team, global presence and a suite of compliance tools within the proprietary Abacus Client Portal, the company says.

Private Equity and MSPs

Abacus Group is backed by WestView Capital Partners, a Boston-based private equity firm focused on middle market growth companies. However, Abacus remains majority-owned and operated by the company’s senior management team.

Meanwhile, rival Eze Castle Integration is backed by H.I.G. Capital and claims to have more than 650 alternative investment and financial sector customers around the world.

Private equity activity in the MSP sector has remained strong, as investors scoop up MSP-focused software providers and IT service providers.

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