martinwolf Transaction Analysis

Financial Information Not Disclosed

• Varrow Revenue (2014): $146 Million*
• Varrow Revenue (2013): $84 Million*
• Varrow Revenue (2012): $62 Million*

Transaction Facts

• National IT solutions integrator Sirius Computer Solutions, Inc. announced today that it had acquired technology solution provider Varrow, Inc.
• Terms of the transaction were not disclosed, but according to the press release, Varrow had revenues of $146 million in 2014 specializing in cloud, mobility and security solutions. Sirius, No. 28 on CRN’s current SP500 list, had $1.3 billion in annual revenue.
• This is Sirius’s third acquisition in the last five years. In October 2014 it built up its big data and BI capabilities through the purchase of Brightlight Consulting, and in November 2010 it rose above $1 billion in revenue when it acquired integration services provider MSI Systems Integrators.

Expanding In a Lower Growth Market

• Diversification is King: As a large EMC partner, Varrow provides Sirius, which has historically been one of IBM’s largest solution providers, with additional non-IBM revenue. This is indicative of a pattern of IBM-centric companies branching out to provide additional product capabilities, especially as IBM continues its shift away from products and toward services (exemplified by the sale of its x86 server business to Lenovo).
• Low Organic Growth Drives M&A: Today’s lower-growth environment faced by the IT Supply Chain industry is prompting large businesses to acquire established businesses and customer bases rather than trying to organically grow geographies and customer segments. In Varrow, Sirius gets access to mid-size customers in the Carolinas and Virginia area.
• Private Equity-Driven Growth: Since 2006, Sirius has been a portfolio company of Thoma Cressey (now Thoma Bravo), a private equity firm behind some of the technology sector’s largest leveraged buyouts including September’s take-private of Compuware.