MicroCorp Gets VAR Base With Five Star Purchase

MicroCorp is making good on plans to buy other companies that expand its business model.

On Friday, the Atlanta-based master agency will close on its purchase of Five Star Communications, which bills itself as an independent telecom brokerage that sells through VARs and agents. Financial terms of the deal were not disclosed; MicroCorp and Five Star both are privately held.

The transaction is the first of its kind for MicroCorp as it aims to buy the customer bases of small master agencies, systems integrators and interconnects with carrier-services businesses; MicroCorp sees its future in cloud computing, managed services and, overall, a consultative approach. Most of all, the Five Star deal signifies MicroCorps first major step toward incorporating VARs into its strategy.

Indeed, thanks to Florida-headquartered Five Star, MicroCorp now has a large concentration” of VARs, systems integrators and agents in the Sunshine State, said Brad Miehl, president and CEO of MicroCorp. Five Star works with more than 50 agents and VARs, mostly in Florida. A few partners sell in other parts of the Southeast.

In addition, Five Star is a top Qwest Communications (CenturyLink) master agent. This helps us increase our relationship with Qwest because Five Star has a lot of staff that came out of Qwest and are very familiar with the inner workings,” Miehl explained.

MicroCorp also will retain Five Stars contracts with carriers including Level 3 Communications, AireSpring, American Telesis and PAETEC, among others. Most of Five Star’s sales have been with Qwest, however.

Meantime, for Five Star, M&A was the logical course of action. We sought to take our business to the next level and we realized that the most effective way for this to happen was to become part of a larger organization,” said Roy Tanner, president and CEO of Five Star, in a prepared statement. MicroCorp was the clear choice.”

Negotiations and Next Steps

Five Star and MicroCorp had been in acquisition talks since Spring 2010. Its been a lot of negotiating,” Miehl said.

Once the details were settled, MicroCorp focused on moving Five Star employees and processes over to its systems. MicroCorp is keeping Five Stars four staffers; Tanner, who founded Five Star in 1997, intends to retire as a result of the purchase.

Miehl said MicroCorp plans to hire six more people so it can fully support its new VARs and systems integrators. MicroCorp already manages orders and milestones for partners but is going to ramp up its efforts because VARs arent used to overseeing day-to-day functions in a carrier-services environment. The master agency also will put support infrastructure in place to help VARs close business.

Were handling it so they dont have to,” Miehl said. Our agents appreciate that but the VARs really value it.”

Miehl doesnt foresee channel conflict between its agents and VARs. VARs are basically selling into their account base, not necessarily out pushing carrier services as aggressively as agents are,” Miehl said. He explained that, for equipment-centric partners, carrier services round out a sale. Of course, Miehl added, agents need to look at doing that as well, although more on the managed services and equipment sides.”