Mergers and Acquisitions, Mergers and Acquisitions, MSP

EarthLink Retreats From Selected Managed IT Services

EarthLink remains in the network services business, but appears to be retreating from the IT services market -- selling that business unit to Synoptek for $29 million. The move is the latest sign of shifting interests and commitments in the MSP market.

First, the big picture. EarthLink confirms that it sold its IT services business -- representing about 1,700 customers -- to Synoptek, one of the best-known MSP buyers in the market right now. It sounds like EarthLink and Synoptek carefully considered ongoing mutual customer support as part of the deal.

An email that EarthLink sent to customers stated, in part:

"For customers that have Network Services from EarthLink, EarthLink will continue to be the provider of those services. For customers that have IT Services with EarthLink, Synoptek will be the provider for those services going forward. As part of this transaction EarthLink and Synoptek have entered into a partnership which allows our two organizations to work together to provide focused solutions to your organization. This move will insure you are getting the best possible service and future innovation for your products and services."

(Special thanks to the ChannelE2E reader and EarthLink customer who shared that email with us.)

This Sounds Familiar

Take a closer look and it sounds like EarthLink sold the Centerbeam business -- acquired for $22 million in 2013 -- to Synoptek, though we haven't specifically confirmed that angle. Synoptek appears to be acquiring those assets for about $29 million -- or only about 0.78 times the business unit's annual revenues, according to ChannelE2E calculations. (We don't have EBITDA figures.)

We'll share more thoughts on this deal soon.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.