CompassMSP Acquires IT Direct, Names New CEO
Managed IT service provider CompassMSP has acquired IT Direct, and confirmed a CEO transition. Financial terms of the deal were not disclosed.
This is M&A deal number 100 that ChannelE2E has covered so far in 2021. See all technology M&A deals for 2021 and 2020 listed here.
IT Direct is based in Hartford, Connecticut. IT Direct founder and CEO Ari Santiago succeeds Josh Kotler as CEO of the combined company. Kotler, in turn, becomes CSO and head of acquisitions at CompassMSP. Moreover, the company will move its headquarters to Hartford.
The is CompassMSP’s eleventh acquisition, and its largest to date, according to the buyer.
IT Direct, founded in 202, is no stranger to acquisitions, having bought ITG Cloud in October 2019. That deal turned IT Direct into the largest pure-SMB technology managed service provider in the state, the company asserted at the time.
CompassMSP Acquires IT Direct: Investing In New England
George Ferris, chairman of the board, commented on the deal:
“We are delighted to announce Ari’s appointment to CEO. He is the right leader for Compass, having built a prominent regional business with a strong culture and exceptional customer service. Critically, Ari shares our vision for Compass’ growth strategy that has a dual focus on delivering positive growth for our team members as well as our clients. To that point, it is clear Ari cares deeply about his team members and clients and we look forward to welcoming them to the Compass family.”
“I am proud of the IT Direct team. We have built an incredible company that will continue onward with Compass to achieve our vision to be the North American leader in designing, delivering, and supporting technology solutions for SMBs. My goal is to share best practices across all Compass locations so that our clients benefit from stronger, safer, and more forward-thinking technology solutions that drive business results.”
“We have a targeted acquisition program and will continue to partner with strong leaders of well-run managed services businesses. We intend to invest further in the New England region to add greater scale and better serve our clients. With every acquisition, we are bringing new strengths and expertise to our team.”
CompassMSP’s M&A Plays
Prior to this deal, CompassMSP was headquartered in Jacksonville, Florida, and had more than 130 employees. The company has additional offices in Florida, Illinois, New Jersey, Pennsylvania and Wisconsin. Compass works in the legal, financial, healthcare and manufacturing verticals, providing on-premises and cloud solutions that range from managed IT and VOIP to software development.
CompassMSP has long touted its “targeted acquisition strategy” focused on strong vertical market MSPs in the SMB sector.
Past acquisitions include:
- October 2020: The assets of Chicago-based MSP Mother Network Guardian (MotherG).
- January 2020: Western Digitech, a Florida-region provider of legal IT services.
- June 2019: GreenPoint of Princeton, New Jersey.
- March 2019: Miami-based Dynamic Media Technologies.
- January 2019: TS Tech Enterprises, an MSP that supports dental practices in the Wyomissing, Pennsylvania, area.
To fund acquisitions, CompassMSP uses a combination of cash generated from the business, alongside a combination of debt and equity. “Our funding model is part of a strong value proposition for the seller,” CompassMSP’s SVP of Central Operations, Tom Praschak, previously told ChannelE2E.
Alongside this most recent deal, the company says it received a significant increase in credit from Webster Bank. Part of that credit will be used to fund future add-on acquisitions, the company said.
Congratulations to George, Ari, Josh, and the entire Compass team. I know how hard you have worked over the years to get to where you are. I am excited to see what lies ahead!
Gary: Thanks for weighing in. And for showing me (and the rest of the industry) the math behind successful businesses and exits.