AHEAD To Acquire RoundTower, Kovarus: 5 Big Things To Know

AHEAD’s acquisition of two other solution providers, RoundTower Technologies and Kovarus, will result in a $2.1 billion channel behemoth and one of the largest channel partners for Dell Technologies and ServiceNow.

Building A Channel Behemoth, One Acquisition At A Time

AHEAD’s acquisition of two solution providers, RoundTower and Kovarus, should by the end of September result in the creation of a new $2.1 billion giant in the channel. The new Chicago-based AHEAD will not only be a sales powerhouse, but will also expand its role as a leading channel partner to key vendors such as Dell Technologies, VMware and Cisco Systems, as well as boost its ability to provide cloud and other services.

AHEAD President Stephen Ayoub (pictured), who joined the company as the result of a prior acquisition, told CRN that the two companies being acquired are very profitable and bring to AHEAD a geographical expansion big enough to make it a coast-to-coast national solution provider, as well as deliver anexpansion of key skills including cloud capabilities that larger nationwide clients are increasingly demanding.

Ayoub declined to discuss the value of the acquisitions.

The CEOs of both RoundTower and Kovarus will join AHEAD, and the executive leadership teams are expected to stay as well, Ayoub said. Details about titles and how the teams will integrate have yet to be worked out, he said.

Neither RoundTower nor Kovarus were particularly active in looking for potential acquirers, Ayoub said.

“But as the markets continue to change, solutions get more complex,” he said. “We realized there’s value in scale in being able to provide unique services and solutions, and that by coming together we can collectively provide additional services and help our vendor partners scale to new markets.”

The two acquisitions, together with several other acquisitions AHEAD made in the past 12 months, carry the potential to create a new powerful force in the IT channel. Here are five significant facts that help illustrate the significance of these acquisitions and what’s in store going forward.

From Regional VAR To National Channel Power

One of the key reasons for channel mergers and acquisitions is to gain a wider geographical presence. Such a move not only brings a solution provider a larger installed base and potential market, it is also increasingly important as its customers grow and expand. A solution provider with a nationwide presence is better able to provide standardized solutions and services to customers in multiple cities and/or states while at the same time fending off the sales moves of larger competitors that might be better able to provide such services across state lines.

This acquisition checks off that box. As it is now, AHEAD is focused on the Midwest and East Coast, with Texas about as far west as the company has gone. The two acquisitions change that. Cincinnati-based RoundTower brings AHEAD a big geographical expansion with offices in Louisiana, Florida, North and South Carolina, Texas, Massachusetts and New York, while San Ramon, Calif.-based Kovarus gives AHEAD a solid West Coast presence, Ayoub said.

“Before this, the farthest west we were was Texas,” Ayoub said. “Now we’re expanding to the West Coast. As we aspire to be a national footprint solution provider and continue our alignment with Dell Technologies, Cisco and other vendors, we feel that a presence on the West Coast is critical to our continual growth in an area we feel was underserved by solution providers focusing on solving complex problems.”

Kovarus also brings to AHEAD a West Coast cutting-edge customer base and a close relationship with the emerging technology segment, he said.

Moving To The Channel Big League

Once the acquisitions of RoundTower Technologies and Kovarus close, the result will be a nation-wide solution provider with over 1,000 employees and over $2.1 billion in revenue, and a true IT services and sales powerhouse.

That conclusion is confirmed by CRN research. AHEAD is ranked No. 36 on the CRN 2020 Solution Provider 500 list of solution providers, while RoundTower ranks No. 79 and Kovarus ranks No. 93. However, if the three were already a single company, they would rank No. 28 on the list.

That is a significant jump in the North American channel. Moving from No. 36 to No. 28 means that AHEAD is pretty much tied with solution provider stalwarts Avanade and Zones, both of which are currently tied at No. 28.

AHEAD also would jump ahead of such channel powerhouses as Slalom Consulting, ConvergeOne, Softchoice, CBTS, Consolidated Communications, ePlus Technology and AVI-SPL.

Building Vendor Clout

As of January of this year, AHEAD is one of six Dell Titanium Black partners in the U.S., making it one of that vendor’s largest channel partners. Titanium Black partner status requires certain revenue and services commitments above the company’s Titanium partner level, which is the highest level all but a handful of partners can achieve.

The list of Dell Titanium Black partners also includes such major U.S. solution providers as CDW, Worldwide Technologies, Insight, SHI and DXC. Others on the list include two distributors—Tech Data and Ingram Micro—along with a number of international solution providers.

AHEAD is also a large ServiceNow channel partner, and is a large partner with the major cloud providers including Microsoft Azure, Amazon Web Services and Google Cloud Platform, Ayoub said.

“After the acquisitions, our cloud services practice will be close to $60 million,” he said. “That’s only for the cloud services. It doesn’t include selling the cloud, which for us is part of our product business.”

RoundTower and Kovarus, which are highly profitable solution providers, add heft to AHEAD’s cloud and ServiceNow practices, Ayoub said.

All three have in common large practices with a number of strategic vendor partners, including Dell, VMware and Cisco, he said. “From a culture and go-to-market perspective, there’s a lot of alignment with these three vendors.”

Acquisition Experience

RoundTower Technologies and Kovarus are not AHEAD’s first acquisitions.

AHEAD in its current form was formed in October 2019 when the company merged with two other smaller solution providers, Data Blue and Sovereign Systems, into a $1.3 billion solution provider and one of Dell’s largest data center partners under the ownership of Court Square Capital Partners, a New York-based private equity company.

Ayoub was previously the founder and CEO of Data Blue.

A list of AHEAD’s acquisitions includes:

• Link Solutions Group, a provider of digital transformation services with offices in Ohio, Indiana and Michigan. Acquired by AHEAD in July 2019.

• Data Blue, a developer of business transformation solutions. Merged with AHEAD in October 2019 as part of a three-company merger.

• Sovereign Systems, an IT services and cloud services provider. Merged with AHEAD in October 2019 as part of a three-company merger.

• Platform Consulting Group, a provider of cloud-native application development services, based in Denver. Acquired in January 2020.

The Power Of Private Equity

AHEAD is currently owned by Centerbridge Partners, a New York-based private equity firm with stakes in technology, hospitality and services industries. Another private equity firm, Boston-based Berkshire Partners, has a small stake in the solution provider.

Among its tech company holdings, Centerbridge also has stakes in IPC Systems, a Jersey City, N.J. provider of trading communications systems, network service and cloud connectivity, and work- from-home solutions, as well as in Precisely, the Pearl River, N.Y.-based data automation and business software vendor previously known as Syncsort.

Prior to being acquired by Centerbridge Partners, AHEAD had a long history with Court Square Capital Partners, a New York-based private equity firm. AHEAD, founded in 2007, was acquired in 2015 by Court Square Capital Partners for undisclosed terms.

Court Square has been a major player in the IT market, acquiring a number of solution providers. The company in 2007 acquired CompuCom, which it sold in 2017 to Office Depot. Court Square in 2011 acquired unified communications systems integrator Strategic Products and Services (SPS), and in 2017 sold it to ConvergeOne.