Solution Provider Powerhouse Presidio Acquired By Private Equity Behemoth CD&R, Set To Double Down On Cloud, AI

“There is a lot of dry power there for us to accelerate our growth, making the right kind of acquisitions that will provide advanced services, greater geographic coverage or provide even more scale from a people standpoint,” said Presidio CEO Bob Cagnazzi. “We hope to be extremely active growing the business organically and inorganically through acquisitions like we have done in the past.”

Presidio, No. 23 on the CRN Solution Provider 500, is being acquired by private equity behemoth Clayton Dubilier and Rice (CD&R) as part of a bid to expand the $6-billion solution provider’s managed cloud services and digital offerings.

The deal comes nearly five years after London-based private equity firm BC Partners agreed to purchase Presidio for $2.1 billion, taking Presidio off the public market.

As part of the deal with CD&R, which has $57 billion in total assets under management, BC Partners will retain a minority ownership stake in Presidio.

Terms of the sale to CD&R -- which is expected to close in the second quarter -- were not disclosed.

“We’re going to continue to double down on cloud, AI, and professional and managed services,” said Presidio CEO Bob Cagnazzi (pictured) in an interview with CRN. “We don’t think the core foundational world is dead at all. We will continue to make investments around the great partners we have in the core foundational network and data center. Those are going to be opportunities that are certainly going to drive AI solutions for our clients.”

The new partnership with CD&R, which acquired Presidio as part of a $26 billion fund, opens the door for Presidio to continue to make acquisitions to accelerate sales growth, said Cagnazzi.

“There is a lot of dry power there for us to accelerate our growth, making the right kind of acquisitions that will provide advanced services, greater geographic coverage or provide even more scale from a people standpoint,” said Cagnazzi. “We hope to be extremely active growing the business organically and inorganically through acquisitions like we have done in the past. We think we can move a lot faster with a lot more dry power than we have had in the past.”

As part of its acquisition offensive, Presidio last September brought on board Yuri Brodsky, a seasoned private equity executive, as senior vice president and head of strategy and corporate development.

“We brought Yuri over to head that group for us because we wanted to start moving a lot faster and now we’re going to be able to do that,” said Cagnazzi. “It’s exciting!”

Cagnazzi said BC Partners’ decision to retain a minority position in the company is a “great testament” to the strength of the Presidio business. “They could have sold the whole thing, but they see the upside in what we have built,” he said. “They have been a great partner for us.”

Under BC Partners’ ownership, Presidio aggressively built out its cloud services business – which now stands at $1.25 billion – with acquisitions including cloud consulting specialist Coda Global.

“Those deals have been wildly accretive to the business,” said Cagnazzi. “And it is a little hard to do non-accretive deals in a public environment. Those have been critical for us.”

Cagnazzi said he is excited about partnering with CD&R – which has consistently delivered high returns in the intensely competitive private equity market. “They are one of the largest private equity firms in the world and one of the most successful in terms of returns,” he said. “They are really smart, detailed and analytical.”

Cagnazzi, a 40-year channel veteran who has successfully navigated multiple major technology transitions including the move to the cloud, said he sees “tremendous opportunity” ahead with the AI explosion.

“It’s huge,” said Cagnazzi of the AI opportunity. “We see tremendous opportunity with our partners like Nvidia to help customers go on that journey whether it is building their own [AI] instances or providing access to what is publicly available. Helping our clients architect those AI solutions is going to be a huge growth driver. It is also going to be a huge growth driver for the hardware piece of the business too. That’s going to be exciting. This is a really good place to be right now. Our industry has a lot of opportunities.”

Presidio, which has long been recognized as one of Cisco’s top partners, has aggressively built out its cloud and security managed services offerings over the last five years. The company now has 6,600 customers and strong partnerships with the likes of AWS, Google, Microsoft, Palo Alto Networks and Dell Technologies.

Martin Wolf, president of martinwolf M&A Advisors of Scottsdale, Ariz., one of the top channel investment advisory dealmakers, said he believes CD&R will “do well” with the Presidio investment given Cagnazzi’s leadership.

“Bob Cagnazzi has transformed the business multiple times,” he said. “Not only is Bob a survivor, he is an innovator. If you look at Presidio’s technology stack and portfolio they have a lot of competitive advantages. They are important to the vendors and their customers. Their services are what tie the two together. The fact that they have a meaningful and robust cloud offering helps them with customers and vendors.”

Wolf said there is a lesson in the arc of Cagnazzi’s role in the business given that he became CEO of Presidio after his own company, BlueWater Communications, was acquired by Presidio in 2012. “Remember, Bob was an acquired asset,” said Wolf. “There is a lesson there for everybody in the channel.”

Presidio has thrived even with intense competition from the likes of a broad set of large competitors including CDW, Accenture and OEMs including Broadcom, said Wolf.

“It has gotten tougher and tougher and you need to be agile. Presidio has demonstrated that they are,” he said. “This is a big deal. There is a lot of life left in Presidio.”