eGroup Gets Equity, Plans Acquisitions As It Eyes Growth

‘For a company of our size—about $30 million in revenue—to grow like we want to, I felt it’s time to de-risk and to bring in the right people. We are pursuing organic growth to muscle up on what we have, and acquisitions to find additional capabilities we don’t have while expanding our footprint to areas where we don’t have the manpower,’ says Mike Carter, eGroup founder and principal.

A private equity firm and a family investment group have made an equity investment in eGroup, a services-led solution provider, with the aim of acquiring other solution providers.

Private equity investment firm Evolute Capital and family investment firm Hunt Technology Ventures, both based in Dallas, combined to purchase a majority stake in eGroup as part of a plan to build a larger channel company, said Mike Carter, founder and principal of the Mt. Pleasant, S.C.-based solution provider.

The investment is a big change for eGroup, which has remained debt-free since its founding in 1999, Carter told CRN.

[Related: Sirius CEO To Continue At CDW After Acquisition Closes]

“But for a company of our size—about $30 million in revenue—to grow like we want to, I felt it’s time to de-risk and to bring in the right people,” he said. ”We are pursuing organic growth to muscle up on what we have, and acquisitions to find additional capabilities we don’t have while expanding our footprint to areas where we don’t have the manpower.”

eGroup, which is No. 421 in CRN’s 2021 Solution Provider 500, is rather unique in its services-led approach to business, Carter said.

“We have a lot of clients who buy their products from CDW,” he said. ”But they are looking to transform digitally, and so work with us on projects to control the delivery experience on the services side.”

Carter declined to discuss the size of the investment Evolute and Hunt made in eGroup, or the percent of eGroup they acquired, but he did say that they now have a majority stake in his company.

He also said that Hunt Technology Ventures has other solution providers in its portfolio, but declined to name them.

eGroup has not made acquisitions in the past, but that is likely to change now, Carter said. The company is looking at potential acquisitions of solution providers with a focus on Microsoft cloud services including Azure and Microsoft 365, as well as those with a focus on services around the Nutanix hyper-converged infrastructure platform for on-premises work, he said.

“There is interest in building on these relationships to use acquisitions to expand application modernization that leverage cloud resources or go cloud-native, and on immersing those applications in security,” he said. ”For us, cloud is not a destination, but is instead an operating model through which IT delivers services. We have clients 100-percent in the cloud and clients that have no cloud at all. Nutanix is our lead for on-premises infrastructure.”

Carter said the investment in eGroup has given him a new mandate.

“We will use eGroup to build out the eGroup brand as a platform to roll up other companies, particularly services-led companies with cloud, platform, and security services,” he said. ”Our goal is to grow to $125 million to $150 million in revenue. On the day after we put the investment together, we were already starting to talk about growth through acquisition.”

The new investors have already had an impact at eGroup, Carter said.

“We recently on-boarded a new customer that required a deep legal discussion,” he said. ”It was fantastic to bring in legal resources from the Hunt team. It‘s nice to have these kind of resources to help us grow.”

Carter said he had conversations with about 30 large strategic investors, private equity firms, and family investment firms before closing the deal with Evolute and Hunt.

“Like anything else, we were in the right place at the right time,” he said.