TekLinks Ups Its Cloud Services Game With Claris Networks Acquisition

TekLinks Inc., one of the top managed services providers in the country, has considerably increased its recurring revenue cloud services footprint with the acquisition of fast-growing Claris Networks.

The deal provides Birmingham, Ala.-based TekLinks, No 176 on the CRN Service Provider 500 with $100 million in annual sales, with a cloud services superstar that was No. 138 on CRN's 2014 Fast Growth 150 list.

The Claris Total Cloud offering, a complete, outsourced cloud service, increases in one fell swoop TekLinks' recurring revenue services by a whopping 60 percent, from about $25 million to $40 million, said TekLinks CEO Jim Akerhielm.

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"This is a tremendous strategic fit," said Akerhielm. "We acquire a company that has a very strong set of hosted managed services that are complementary to our current product set. It truly is a 'lift and shift.' They are taking an on-premises solution and moving it fully into the cloud, so there [are] clearly capex savings over the long term and there is always services improvement."

Terms of the deal for the 17-year-old Knoxville, Tenn.-based Claris -- which has about 100 employees serving small and midsize customers in its home state -- were not disclosed. Claris bills itself as the largest managed service provider in Tennessee.

Claris Networks CEO Larry Bodie and co-owner Dave Sagraves will maintain a partial ownership stake in TekLinks and take significant executive roles at TekLinks. Bodie will become senior vice president of Tennessee for TekLinks.

Claris brings a bevy of sales and services talent, along with a proven cloud managed services model that TekLinks can leverage to drive sales growth, said Akerhielm. "We certainly strengthened our technology, sales and support team considerably," he said. "Their managed services support model is outstanding."

The recurring revenue kick comes with that managed services piece of the TekLinks business growing at more than twice the rate of the company's professional services and hardware-software product business, said Akerhielm. "The recurring revenue piece is going to continue to grow quickly," he said. "That's because the market is going in that direction."

The deal also gives TekLinks -- the top regional Southeast managed services provider -- a foothold in the Nashville, Tenn., market. What's more, about 50 percent of the Claris business is in the health-care market, which complements TekLink's robust Healthcare Services Group.

TekLinks intends to extend the Claris Total Cloud offering into its broad Southeast market. Furthermore, the company said, TekLinks will make its enterprise professional services and IT product business available to Claris customers in Tennessee.

"To the extent those customers have a need for professional services and hardware and software resale, we can certainly support that and therefore build a stronger relationship with that legacy Claris customer," Akerhielm said.

The Claris Networks acquisition is the second deal completed by Akerhielm since he took the helm of TekLinks nearly three years ago. The last acquisition was a deal two years ago to acquire health-care managed services provider ClinicAnywhere.

Akerhielm said he will continue to look at acquisitions with a focus on deepening customer relationships and expanding geographically in the Southeast. "We have spent a lot of time looking," he said, noting there just aren't that many MSPs that have sales scale and Earnings Before Interest, Taxes and Depreciation of 20 percent.

TekLinks is uniquely positioned as a premier IT solution provider because of its hybrid cloud approach to the business and the breadth and depth of both its recurring revenue services and enterprise professional services and product business, said Akerhielm.

"My view is, we want to have tremendous relationships with decision-makers at our customers so that we can engage them on their technology road map and support them on that road map over the next five to 10 years," said Akerhielm. "We are not going to be exclusively on our hosted cloud or Amazon or (hardware software product) resale. Those are products and services. We are there for the long term, building solutions with our customers, so we have to have a diverse set of skills in order to do that."

PUBLISHED MAY 12, 2015