Cybersecurity Fuels ITS' MSP M&A Strategy

Tom Andrulis, CEO of Intelligent Technical Solutions (ITS), was looking for a strong company focused on a hot tech sector to cap ITS’ latest round of M&A. He found it in A Leap Ahead IT (ALA IT), a Sacramento, California-based MSP led by Sean Harris, an expert in cybersecurity, which happens to be one of today’s hottest managed services.

Andrulis recently filled us in on some of his strategies and thought processes behind evaluating the five MSPs ITS added over the last six months or so, all amounting to a significant expansion. Andrulis’ approach can help MSPs looking to position themselves for a merger or acquisition, strengthen their core offerings or uniting a geographically diverse team around particular solutions.

In ITS’ case, the solution was cybersecurity. Prior to the ALA IT acquisition, Andrulis compared ITS’ security offerings to an X-ray machine. What the company needed was an MRI.

ITS’ Tom Andrulis

“We can see some things with the X-ray machine. You break your bone; we can fix that. We needed to increase the tool set with an MRI so we can see things like the soft-tissue dame and really pinpoint what’s going on,” he said. “Without the right tools, it’s hard to see all of the problems. Without the right people, it’s hard to respond to them appropriately. You get the tools, you get the people, you get the processes. You put all that together and that’s the cybersecurity framework in a nutshell.”

Finding a Cybersecurity Superstar

Enter Harris, the former CEO of ALA IT, whose resume includes more acronyms than an overeducated scientist. There’s MBA, CISSP, PMP, CCSP, MCSE for starters. Harris is now ITS’ senior vice president of cybersecurity. He’s also an adjunct instructor of the cybersecurity boot camp at UC Davis.

“That’s the type of talent we want. He’ll help train our team and bring on his certifications and know-how,” Andrulis said. “We keep adding to our platform to increase all of the pools and resources and personnel to help protect our clients.”

When Andrulis talks about his team, he’s referring to ITS MSPs in Arizona, Nevada, California, Oregon, Washington state, Detroit and Chicago. The new round of M&A and partnerships gained steam after Tower Arch Capital acquired ITS last July.

The goal of all ITS’ M&A, Andrulis said, is to bring the companies together under one culture, brand and team. The team can then rely on people like Harris to share their expertise across the board. Andrulis expects those specialists to take the lead in creating the training and solutions all ITS MSPs can bring to market or deploy in unique situations.

Andrulis gave an example of a big project that ProTechnical, a Reno, Nevada-based MSP ITS recently acquired, had to complete over a weekend. Under the gun, Andrulis flew in an A-list of ITS engineers from across the country to pitch in. The team finished the work on time.

“That‘s why it’s so important to have one team,” he said.

Horizontal Platform, Strong Vertical, Right Location Make a Good Fit

Some of those teams might soon have a shorter distance to travel. Part of Andrulis’ M&A strategy is to pick up key companies in stable markets. He’ll then add more that augment and complement each other’s strengths. ITS, for example, recently added Ox Power Computing Service in Phoenix and Granite Computer Solutions in neighboring Tempe, Arizona, to the companies it bought in the area several years ago. ITS also acquired Brightwire in Olympia, Washington, a state where ITS plans to partner with a few other MSPs in the next six to nine months. ALA IT strengthens ITS’ presence in California, where it has MSPs in San Francisco and Oakland.

“At our size, though, we have a sizable amount of construction clients, attorneys and CPAs. We have a variety of clients,” he said. “When we bring all these companies together, we can now have teams specialized on those type of clients. We’re starting to make that shift internally. I think that’ll be a better experience for the clients.”

The new companies list some verticals and specialized offerings. But they are all horizontal enough to protect themselves if a vertical market flags, Andrulis said. MSPs looking to sell should know how their strengths and weaknesses compare to those of their closest competition. A well-defined vertical offering within a strong horizontal platform helps.

That helped ProTechnical stand out. Andrulis and his team were impressed by the MSP’s focus on health care informatics and other solutions.

“When we started talking about that, everybody’s ears perked up,” he said. “It was different; we haven’t seen anybody else doing that. Having a health care informatics team gives us a slight competitive advantage.”

Despite today’s unstable economy, Andrulis thinks it’s a great time to be an MSP, especially those with a strong horizontal offering and the specialists who can lift it all above the rest.

“MSPs are not going to go away. It might be a little bit more difficult to sell new deals, or you might have a couple of clients that fall out,” he said. “But in general, we’ll all be fine.”