MicroCorp Continues Transformation With PMG Buy

MicroCorp Inc. continues to transform its business model with the acquisition of Premier Management Group, the carrier services arm of VAR Premier Solutions Group. Terms of the deal, which closed Wednesday, were not disclosed.

MicroCorp announced in spring 2011 that it was seeking acquisitions in an effort to either expand its coverage geographically, improve its volume with a carrier or  build its expertise in managed and cloud services. Earlier this year, MicroCorp bought Five Star Communications in Florida to expand its VAR and agent reach, as well as strengthen its relationship with CenturyLink.

Unlike Five Star, PMG will operate as a subsidiary of MicroCorp and will remain in Lancaster, Penn., alongside PSG, which specializes in hardware and managed services. MicroCorp has taken over the management of all of PMG and PSG’s existing carrier customers, which gives the agency exclusive rights to all new carrier sales between PMG and PSG. As a result, PMG will continue selling carrier services while incorporating Cisco Systems Inc. equipment and various forms of managed services such as video, data center and security, all provisioned through PSG.

Brad Miehl, president and CEO of MicroCorp, said its subagents also can sell equipment and managed services, thanks to the PSG relationship “In order to survive long-term, our agent channel will have to provide comprehensive managed solutions to their customer base,” Miehl said. “They will not be able to do this on their own. They will have to partner with quality companies and we intend to cross-pollinate with Cisco and other managed solutions throughout our channel.”

MicroCorp is adding direct salespeople to serve VARs and integrators because of the PMG transaction. In a memo to employees, Miehl called this “a natural evolution to the master agency model not to compete with our existing agent channel but, rather, to provide the launching pad to play in what I consider a much bigger sandbox: the VAR and systems integrator space.”

MicroCorp plans to include direct sales to work with VARs and integrators “so that both sides are providing comprehensive managed solutions to the end customer,” Miehl told staff. That’s because VARs and integrators work differently than do agents. In other words, agents traditionally manage pre- and post-sales activities for network services. VARs and integrators, on the other hand, have little, if any, experience in this field.

“[W]e simply cannot provide a carrier quote and expect the VAR to manage all pre- and post-sales activities,” he added. “They are just not equipped to handle such tasks.” That’s where a direct sales force will fill the void, mirroring the handoff relationship between PMG and PSG. “I want to … become the telecom partner and resource for VARs and systems integrators nationwide,” Miehl wrote to employees.

Still, MicroCorp said agents will not be negatively impacted. PMG itself will only focus on selling carrier services to VARs and systems integrators in the northeastern United States. That footprint will enhance MicroCorp’s presence in the region and significantly increase its market share in Pennsylvania, the company said in a press release.

In line with MicroCorp’s plan, more M&A is on the horizon for  the master agency, Miehl said. “I cannot be specific, but there will be other transactions in 2012 that are in alignment with our strategic plan,” he said.

To be sure, MicroCorp is perhaps the telecom agency most active in M&A right now as it works to create a sustainable business model. For agents accustomed to selling connectivity, this means becoming versed in data and equipment; for VARs, it’s just the opposite challenge. Offering both capabilities seems the most effective approach.

Daryl Heller, CEO of PMG’s former owner, Premier Companies LLC, agreed, and said that was one of the reasons PMG sold to MicroCorp. “As we developed our strategic direction, it became clear that a synergistic partner could further augment our value proposition at Premier,” he said in a prepared statement. “The MicroCorp brand was of particular interest given their impeccable reputation, common world view of directional movement of our industry, cultural alignment, and the unrelenting commitment to develop and layer managed solutions that enhance value to our respective customers.”

PSG is doing more application development in areas including Cisco wireless and video, and said a voice cloud services joint venture with MicroCorp soon will be announced. Agents and VARs will be able to sell these products. “This is truly an exciting time for each of our respective companies, our employees and the MicroCorp channel,” Miehl said.