This is M&A deal 435 that ChannelE2E has covered so far in 2020. See the full M&A deal list here.
CompassMSP has locations throughout the northeastern United States and Florida. This deal will allow the company to expand into the U.S. midwestern region, according to the firm.
Established in 2006, MotherG offers a range of managed IT services for small and mid-sized businesses in the area. MotherG’s employees will join CompassMSP, according to the company, expanding its portfolio of services and deepening its skills in the industrial sector.
CompassMSP will use this acquisition as a jumping-off point in the midwest region, as it looks to grow through add-on acquisitions while investing “significantly” in the business, the company said.
CompassMSP Acquires MotherG: Executive Perspectives
In a prepared statement about the deal, Josh Kotler, CEO of CompassMSP, commented:
“While the significant disruptions in the U.S. economy from coronavirus has slowed acquisition activity in the MSP industry for many, we remain active. MotherG represents an opportunity to partner with a strong business leader in Dave Davenport who shares our vision and operating model. The business has a tremendous track record of customer satisfaction and growth and we look forward to continued success under his leadership of the region.”
Dave Davenport, CEO of MotherG, added:
“We are proud of what we have built at MotherG but we are excited to be joining such a dynamic and growing organization that shares our commitment to providing proactive solutions that improve our clients’ security and technology experience. We've spent 15 years building MotherG and assembling a world-class team and it was important that we partnered with a company that shares the vision of investing in our people.”
CompassMSP’s Acquisition History
CompassMSP, which is headquartered in Jacksonville, Florida, has more than 130 employees serving more than 500 clients. The company works in the legal, financial, healthcare, and manufacturing verticals. CompassMSP provides on-premise and cloud solutions, ranging from managed IT and VOIP to software development.
The company is no stranger to acquisitions, with earlier deals including:
- Jan 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.
CompassMSP has long touted its “targeted acquisition strategy” focused on strong vertical market MSPs in the SMB sector.
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.
Three Sixty Seven Advisors, a middle-market M&A advisory firm, assisted CompassMSP on this latest transaction.