DLT Solutions CEO Resigns, Former CEO Marcotte Returns in Acting Role
Channel veteran Alan Marc Smith has departed as CEO of $1 billion public sector solution provider DLT Solutions two years after taking the top job, CRN has learned.
"Alan demonstrated a great passion for DLT, our employees, as well as the overall business," DLT Solutions told CRN in an emailed statement confirming the departure. "We all want to thank Alan for his commitment to the company over the past two-plus years."
The Herndon, Va.-based company, No. 39 on the CRN Solution Provider 500, said Chairman Rick Marcotte will return to the CEO position on an interim basis. Marcotte was DLT's CEO from August, 2004, to January, 2015, spearheading a successful management-led buyout of the company in 2005 from the heirs of company founder Thomas Marrelli.
DLT's board will actively search for a new CEO to lead the company, the company told CRN, and plans to identify and hire the best possible candidate in the near future.
Sources said that longtime DLT executive Brian Strosser is a likely candidate to be the company's next CEO. Strosser joined DLT nearly nine years ago as senior vice president of corporate sales and strategy. He was promoted into the COO role at the start of 2016, where he leads the company's technology and business development practices.
Smith joined 300-employee DLT Solutions in January, 2015, when the company was acquired by private equity powerhouse Millstein & Co., where he had been an operating partner. Several DLT executives – including Marcotte and Strosser – took an unspecified equity stake in the company at the time of the Millstein acquisition
Neither Millstein & Co, Smith nor Strosser responded to requests for comment.
Martin Wolf, president of martinwolf M&A Advisors of Walnut Creek, Calif., one of the top channel investment advisers, which has worked with DLT on a number of deals, said the company is in good hands with Marcotte.
"I think Rick Marcotte is one of the best marketers in the channel ever," said Wolf. "He is one of the best operators I have ever worked with. I think the company will do very well in the future. They have a dominant franchise. It's a great company."
As for Smith, Wolf said he is also a well-respected channel executive. "Alan Marc Smith could have starred with the Murder's Row lineup of the Yankees in the '20s," he said. "He is still a young guy and has a lot more game."
Smith's departure comes just three weeks after DLT announced Joe Donohue would be its new chief financial officer, replacing longtime CFO Craig Adler. Donohue previously spent eight years as CFO of Agilex Technologies, where he led the successful sale of the solution provider to Accenture Federal Services in 2015.
Smith first made his name in the channel as the CEO of Tarrytown, N.Y.-based distributor Westcon from 1997 to 2004, where he oversaw revenue growth from $120 million to more than $2.2 billion and grew headcount from 120 employees to more than 1,400 employees. He subsequently spent five years as CEO of Electrograph Systems, which focused on advanced display technology products and software.
Strosser told CRN in an August, 2016, interview, that two of DLT's fastest-growing areas have been cloud computing and cybersecurity. DLT was an early adopter in the cloud space, Strosser said at the time, and has added capabilities around migration services, managed services, and subscription-based Software-as-a-Service deployments.
As far as cybersecurity goes, Strosser said DLT stood up a laboratory inside its new headquarters in September 2015 to demonstrate the cybersecurity solutions the company felt would be most vital to protecting the government's critical infrastructure. The company has seen increased client spending about cybersecurity requirements and requests, Strosser said.
Roughly three-quarters of DLT's business comes from the federal government, Smith told CRN in August, with the remaining 25 percent of sales going to state and local government as well as educational institutions. DLT doubled down on its state and local business in 2013 as spending declined in the U.S. federal space, the Washington Post reported at the time.
DLT is unique in the federal IT services space in that it takes a smaller and more focused approach from a vendor perspective, working with just 40 supplier partners, CTO David Blankenhorn told CRN in August 2016. Many of DLT's larger competitors have hundreds of IT vendors on their line cards, Blankenhorn said.
The company derives roughly 95 percent of its revenue from software, with just 5 percent coming from hardware sales, Smith said. Some of DLT's top vendor partners include AWS, Autodesk, ForeScout, Google, Informatica, McAfee, Oracle, Quest Software, Red Hat, SolarWinds, Symantec and Veritas, the company said.
Smith told an audience of colleagues last month at the XChange Solution Provider 2017, hosted by CRN parent The Channel Company, that the channel will find itself in a dangerous position if it doesn't prepare for the dramatic economic changes that come with selling subscription-based software and services.
Many solution providers are well-versed in "selling boxes," but even historically hardware-centric vendors -- like Cisco -- are starting to shift toward software and services-based offerings. This is changing the channel landscape as partners know it, Smith said at XChange Solution Provider.
Steven Burke and Sarah Kuranda contributed to this report.