Private Equity Behemoth Sverica Capital Management Buys Synoptek, One of The Nation's Largest MSPs

Private equity giant Sverica Capital Management has purchased Synoptek to help the Irvine, Calif.-based managed services powerhouse carry out an aggressive geographic and service expansion, Synoptek said.

Synoptek plans to strengthen its presence in the northeastern United States and Europe, and grow its security and managed hosting services practices, thanks to Sverica's acquiring a majority stake in the firm, according to Synoptek CEO Tim Britt.

"This is a milestone in our development," Britt told CRN. "It gives us a much stronger private equity partner going forward that has experience in this space and wants to grow and build a national, branded managed service provider."

[Related: MSP Synoptek Boosts Cloud Portfolio With Acquisitions, Sets Sights On New Customers]

Sverica bought out the majority of Synoptek's current owners, Britt said, which include private investors involved since 2012, institutional firms holding a combined 40 percent stake in the company and a small portion of the management team stake.

The firm's investment has made it possible for Synoptek to refinance all of its debt and pursue additional mergers and acquisitions, according to Britt. Synoptek also plans to leverage Sverica's industry relationships -- particularly with other managed and hosting service providers -- to provide the firm with greater direction, he said.

Synoptek's entire management team will remain intact after the acquisition, Britt said, although the company will probably restructure its board to add representation from Sverica. Synoptek also plans to add more industry representation -- including former mindShift CEO Paul Chisholm -- to its board to broaden its industry expertise, Britt said.

Sverica holds a minority stake in Optiv Security, the world's largest security solution provider. The San Francisco-based private equity firm starting tracking Synoptek in 2013 and first met Britt in early 2014, according to a company statement.

Britt said he was impressed by Sverica's track record of holding companies with capabilities around the data center, hosting managed security and managed services. Sverica declined to comment for this story.

Much of Synoptek's business is based around servicing SMB and midmarket customers with intense IT needs.

Five to 10 years ago, Britt said the Software-as-a-Service and back-office system management markets didn't face considerable security threats as the bad actors tended to target larger businesses. But that is no longer the case.

"We're seeing security threats increasingly target companies in our space," Britt said.

For this reason, Britt said, Synoptek wants to fortify its security capabilities through both M&A and strong partnerships.

In addition to Irvine, Synoptek's major offices are in Denver; San Francisco; Sacramento, Calif.; and Boise, Idaho. A large portion of its customers are in California, Colorado, Idaho, Nevada, Oregon and Washington.

But thanks to February's acquisition of Rocket Science Consulting and constant promotion by New York-based partner FusionStorm, Synoptek now does 10 percent to 15 percent of its business in New York, according to the company. Synoptek is looking to fortify its presence in the New York region through additional M&A, Britt said.

After carrying out five acquisitions since 2012, Britt said, 300-person Synoptek has emerged as one of the largest independent managed service providers in the country. The company has invested a lot of time and money in recent years into defining the market, establishing commonly understood industry standards and standardizing its service portfolio, Britt said.

"The biggest challenge is that the [MSP] market is so fragmented," Britt said.

Synoptek's efforts have paid dividends, as the company is finding it easier to attract customers with each passing year as the market matures.

"For our space, [market leadership] is not as difficult to obtain as one might imagine," he said.

PUBLISHED NOV. 2, 2015