CDW to change ownership

A Chicago firm is set to buy CDW Corp., a major reseller of computer hardware with a significant presence in the federal market.

Madison Dearborn Partners LLC will buy Vernon Hills, Ill.-based CDW for about $7.3 billion under an agreement the companies signed, according to a CDW announcement. According to the agreement, CDW will accept proposals from other potential buyers for 30 days.

CDW-Government Inc. is the company's government subsidiary.

Madison Dearborn is not a familiar name in the government market. The future of CDW-G could be in doubt if the buyer doesn't have expertise in government markets, said government market consultant Mark Amtower. CDW's business-to-business operations accounts for the lion's share of the company's revenue, he said, but the government business is a significant revenue stream and growing faster than the corporate side.

If Madison Dearborn doesn't understand the importance of the government market, "They could wreck the train," Amtower said.

In the first quarter of 2007, CDW's corporate sector raked in $1.22 billion in sales, a 6 percent increase over the $1.15 billion in brought in during the first quarter of 2006. Meanwhile, public sector sales rose 13.4 percent in the same period, from $438.4 million to 497.4 million.

The short term effect on CDW's government customers isn't likely to be significant, he added. But over a longer period, some customers might desert CDW-G in favor of other resellers. The companies expect the deal to close late in the year, either toward the end of the third quarter or sometime during the fourth.

CDW-G ranks No. 63 on Washington Technology's 2007 Top 100 list.