Pomeroy Scooped Up By Private Equity Firm

A private equity giant is set to acquire managed service provider Pomeroy and join it with a 1,000-person retail partner, combining the two to create a nearly $1 billion channel behemoth with more than 4,000 employees.

The new owner will be Los Angeles-based Clearlake Capital, owner of Tolt Solutions, which offers technology and services to such industries as retail and food services. Pomeroy is being sold by Platinum Equity, of Los Angeles, which acquired the company in 2009.

Pomeroy -- No. 44 on CRN’s 2015 Solution Provider 500 list -- and Tolt will merge under what’s being called the Pomeroy Group. Both will continue to operate under their own brands, the three firms said in a statement.

[Related: CRN's Mergers and Acquisitions News Page]

Clearlake most recently acquired big data software provider Syncsort, of Woodcliff Lake, N.J. In February, the private equity firm bought FrontRange Solutions, based in Pleasanton, Calif. Last year, it acquired ConvergeOne, one of the world’s largest Avaya channel partners.

Martin Wolf, president of martinwolf M&A Advisors, of Walnut Creek, Calif., one of the top channel investment advisory deal-makers, called the deal good for both Pomeroy and Tolt. The logic behind the merger is ’very interesting’ because it allows them to be ’more meaningful’ to customers and potential customers because of the added breadth, he added. Tolt, for instance, would be able to expand beyond its customer base of retail and food-service companies.

Wolf said the merger with Tolt is reminiscent of what Pomeroy did with CompuCom, a former competitor that Platinum bought in 2004 and sold three years later. Pomeroy converted CompuCom from a product-centric company to one focused on services, he said.

’This is not the first time they’ve run this play,’ Wolf said. ’They’re good at it.’

Pomeroy, based in Hebron, Ky., has clients throughout the Americas and in Western Europe. Its portfolio of offerings includes end-user, network, data center and cloud services.

Tolt, based in Taylors, S.C., will operate as a stand-alone division within the Pomeroy Group to maintain its focus on the industries it serves, the statement read. Tolt’s clients include such high-profile retailers as Ahold USA, BJ’s Wholesale Club and Wawa.

Terms of the transaction were not disclosed. The deal is subject to customary closing conditions, according to the companies. Platinum expects the deal to close by the end of this year.

Pomeroy and Tolt will continue to be led by their existing management teams: Chris Froman, CEO of Pomeroy, and Jack Gularson, president and chief operating officer at Tolt, the statement said.

The acquisition is also another in a string of private-equity investments in solution providers this year, including a few on CRN’s SP 500. They include Atlantix Global Systems -- No. 186 -- which was sold last week to Millstein & Co., by one of Cisco’s largest partners, Presidio.

NWN, a $350 million solution provider growing at a double-digit clip, recently sold a majority stake to private equity company New State Capital Partners as it aims to become a $1 billion cloud power. And Sirius Computer Solutions sold a majority stake in September to private equity giant Kelso & Co., giving it extra capital as it targets more mergers and acquisitions.

As for the broader trend of private-equity companies buying solution providers, Wolf calls that ’huge,’ especially because owner-operated companies haven’t been able to land public financing in today’s market. But an ’abundance’ of cheap financing for private equity firms helps make such deals work.

’It’s landscape-changing,’ he said of private-equity buys. ’It’s a phenomenon that doesn’t seem to be going away for the foreseeable future.’

PUBLISHED OCT. 26, 2015