Converge Technology Solutions (CTS-V): Creating a Leading North American Hybrid IT Solutions Provider

December 20, 2018 - CTS is creating a leading North American Hybrid IT Solutions Provider selling public cloud, hardware, software, and managed services solutions to Corporate and Government customers. CTS has done 6 acquisitions to date: Corus360, Northern Micro, Key Information Systems, Becker-Carroll, BlueChipTek, and Lighthouse Computer Services; and made a strategic investment in Essex Technology Group ("Essextec") facilitated by Ingram Micro. CTS is at the end of Phase 1 of its three-phase growth strategy – having built a national footprint across the U.S. and Canada; with a national Managed Services/Recurring Revenue offering and a revenue/Adj. EBITDA run-rate of ~$600M/$24M. CTS is focused on acquisitions and organic growth through cross selling, not cost cutting. Sales leverage will come from running campaigns with Tier-1 vendors repeating industry specific sales across geographies, and cross-selling best of breed solutions to other CTS customers. In addition, receiving Top Vendor certification (Cisco Gold, IBM Platinum, etc) leads to better pricing, rebates and market development funds. From a valuation perspective, on a run-rate TTM adjusted EBITDA basis, CTS is trading at an EV/EBITDA of 5.6x versus its North American IT Services and Global VAR comparables trading at 10.6x/10.2x. Recently, Computacenter (CCC-GB) acquired FusionStorm (private) at an EV/EBITDA of ~10.5x TTM.