Avant Takes Private Equity Funding from Pamlico Capital, Eyes Partner Investment

Private equity is hitting the agent channel again as Avant announces an investment from Pamlico Capital.

The Chicago-based technology solutions brokerage secured an undisclosed amount of funding from Pamlico that it will use to expand and scale. Co-founders Ian Kieninger and Drew Lydecker and their management team “will maintain significant ownership” in the company.

Avant’s Ian Kieninger

“The speed of digital transformation is only increasing and solutions are more complex and evolving faster than ever before, meaning that the expertise provided by Avant’s trusted advisers is at its highest level of demand,” said Kieninger, who is Avant’s CEO. “Through this investment, and the network, resources and expertise of Pamlico, Avant is positioned to not only meet that demand today but support our system for the IT decision-making landscape of the future.”

Twelve-year-old Avant has grown its employee count by 62% over the last two years and has vowed to continue its hiring streak. The company is also reporting business growth. Average deal size is increasing, and more and more of its agents are landing enterprise customers.

Avant Communications’ Drew Lydecker

“I’m extremely proud of the accomplishments and progress our Avant team has made over the past decade. We’ve developed a strong reputation for providing top-level service and being a true partner to CIOs and IT decision-makers across the globe,” said Lydecker, who serves as Avant’s president.

Lydecker said the investment will not change Avant’s mission “to be the global leader in powering next-generation technology decisions.”

“Rather, it represents a tremendous opportunity to enhance our support and further enable our trusted advisors to cement our position as the leader in the market for years to come,” he said.

The Investor

Kieninger said Pamlico aligns well with Avant’s culture, values and mission.

Pamlico is a North Carolina-based firm that has existed since 1988. It focuses on “growing middle market” businesses in health care, communications, and business and technology services. Inc. recently named Pamlico it its list of “Founder-Friendly” private equity and venture capital firms.

Pamlico’s Scott Stevens

“Given the rapid pace of change and innovation in today’s technology landscape, we are big believers in the mission of Avant and its trusted advisors,” said Scott Stevens, partner at Pamlico. “Ian, Drew and the entire Avant team have built an impressive company in which we are proud to invest.”

Pamlico’s Andrew Tindel

Pamlico Principal Andrew Tindel praised Avant’s platform and partner ecosystem.

“Pamlico is committed to partnering with the Avant team and providing new resources to accelerate this momentum in building the market’s leading distributor for next generation technology,” Tindel said in a news release.

Avant relied on Guggenheim Securities as its exclusive financial advisor.

Private Equity in the Channel

Avant’s Utah-based competitor Telarus last December announced a private equity investment from Columbia Capital. Telarus went on to acquire Philadelphia-based Chorus Communications and Virginia-based Comtel Communications. Private equity has also touched the agent/brokerage channel in the form of Berkshire Partners handing Upstack $50 million to acquire more than 15 agencies.

Kairos Data Communications’ Lucas Salvage

Lucas Salvage is the chief revenue officer at Kairos Data Communications, which partners with Avant.

He said Avant has identified a need in its agent base for additional support.

“I think [the investment] would hopefully be used to support agents that maybe don’t have the funding that other organizations have, or that want to grow more quickly,” Salvage told Channel Futures. “I think that’s a great thing, because investing in the partners is almost a no-brainer for Avant. Because it’s coming back into them anyway.”

Salvage said he doesn’t anticipate that the investment will lead to M&A in the same way it has with Upstack and other companies.

“My understanding is that it’s more about investing in the partners – not buying them,” he said.

More Partner Reactions

Rad-Info’s Peter Radizeski

Peter Radizeski is the founder and president of Rad-Info. He congratulated Kieninger for the milestone.

“It is a big deal to take on private equity money and relinquish some control of the business,” Radizeski told Channel Futures.

However, Radizeski expressed concerns……”It worries me as a partner that so much private money is behind the brokers. Hard for a partner to fight a multi-billion dollar investment bank over commissions unpaid. Some will say I am being alarmist, but you prepare for what’s possible. Ask Citrix and a few other companies how an activist investor has affected the business. We are at a time when businesses equate getting bigger with getting better and in the history of telecom that has never been the case. Bigger just means bigger,” he said.

Eclipse Telecom’s Dave Dyson

Dave Dyson is the president and founder of Eclipse Telecom, an Avant partner. He said he views the announcement favorably.

“This is great news for Avant and will allow them to expand at an even faster pace than they already were, particularly internationally and likely into new channels altogether. I see this as a big net positive for the partner community as well as it will allow Avant to bolster technical and sales resources to support their partners,” Dyson told Channel Futures.

Kyle Hall is the president of Avant partner Resourcive. Hall expressed his excitement for the Avant team.

“This investment is additional evidence of the growth in our industry and the importance of the services trusted advisors bring to their clients,” Hall said. “Avant has been evangelical about our role in the IT decision making process, and I trust this investment will pour fuel on that fire. I expect we will see continued development of their Pathfinder tool, assistance in marketing for trusted advisors and continued growth and focus on the security, contact center and cloud compute verticals.”

Competitor Perspective

Mike Onystok serves as senior vice president of operations for TBI, another Chicago-based brokerage.

TBI’s Mike Onystok

“We’ve seen an incredible influx of private equity to the channel this year. This kind of investment can be a reliable method to grow and expand while igniting immediate value for both sides, but there is long-term concerns that need to be considered,” he told Channel Futures. “Private equity sees value differently than the channel, which is heavily focused on resale. That could mean increased uncertainty for companies as the investment brings dilution to management.”

Onystok said TBI takes pride in remaining wholly privately held.

“We are determined to remain independent as we see this as the best method of retaining the same level of service and value to our partners and providers,” he said.

Big Validation

Dyson said the investment indicates the amount of respect the brokerage channel has earned.

“Bigger picture, this is great for the whole indirect channel as it is yet another and maybe the biggest to date validator that the best businesses in this space have outsized value and growth potential,” he said. “The secret is out about our channel, and the technology vendors, private equity firms, and most of all, the customers, see the tremendous value our channel provides. This is the way enterprises large and small are going to buy network, cloud, security, and communication solutions going forward. We are entering an era of unprecedented growth.”

Salvage said he has enjoyed a strong relationship with Avant over the last several years.

“Avant’s probably one of the few organizations that is keeping up with the demand of what’s changing out there,” he said. “And I think that them being able to invest in their partners is going to end up helping them grow to what they want to be.”