One out of many

If it weren't already taken, E pluribus unum would be an appropriate motto for Presidio Inc., a newly minted Greenbelt, Md., umbrella company created during the past 3 1/2 years by equity-backed mergers and acquisitions.Chief Executive Officer Joel Schleicher wanted to refashion Presidio Corp., a value-added reseller (VAR), into an organization that could provide a wide variety of information technology services to commercial, federal and state government clients.He envisioned a retooled company that would supply everything from voice over IP, security, switching and routing, wireless, optical, and managed services to refurbishing and reselling used telecommunications equipment.He secured an undisclosed amount of equity funding from a number of leading investment firms, such as Columbia Capital, Oak Capital Group LLC, Meritech Capital Partners and Halyard Capital, said Rudy Casasola, president of the mid-Atlantic and federal division at Presidio Networked Solutions.In November 2004, Schleicher bought Ficomp Inc., of Philadelphia, a Cisco Systems Inc. reseller that built corporate intranets.He subsequently acquired Networked Information Systems Inc., of Woburn, Mass., and Solarcom, of Norcross, Ga., and its affiliate, Atlantix Global Systems. Together, NIS, Presidio Corp. and Solarcom rebranded as Presidio Networked Solutions, with wholly owned subsidiary Solarcom Capital handling leasing and financing arrangements.Some press reports estimated the value of the deals at $800 million, but Casasola declined to provide figures. "It was a good number," he said. "It gave us enough capital with which to do not just acquisitions but to grow the business organically."Schleicher's acquisition activity may have been prompted by what some analysts say is a significant shift in the IT sales channel, with direct marketers stepping into the traditional territory of the VARs. For example, last year CDW Inc. bought Berbee Information Networks Inc., a Madison, Wis., VAR with more than 800 employees and nearly $400 million in sales.The deal gave CDW a door into the lucrative IT services market and made the Vernon Hills, Ill., reseller a competitor of Schleicher's new Presidio Inc.In April, Schleicher unveiled Presidio's three business units: Presidio Networked Solutions, a solutions provider focused on commercial and government customers; Atlantix Global Systems, which buys and refurbishes used IT products and then resells them; and Solarcom Capital, to handle rental and leasing financing.As a result of the acquisitions, Presidio Networked Solutions' engineering staff grew to about 260 employees, and the company expects to hire an additional 400 engineers and sales people in the next few years, Casasola said.The added financial strength and engineering capabilities have already generated customer leads "that in the past probably wouldn't have come to us," he said.But "the transition from a VAR to a solutions provider is not easy," said Mark Amtower, principal at Amtower and Co. Presidio might shorten the transition process by buying other companies, he said, but by retaining the Presidio name, customers will still think of it as a VAR.Amtower cited GTSI Inc.'s similar attempt at transformation the past two years. "GTSI's revenues are still largely product-driven," he said. "And Presidio has been around as an 8(a) VAR since its inception in the mid-to-late 1980s."Still led by Schleicher, Presidio now bills itself as the nation's largest independent provider of advanced IT infrastructure solutions, competing against the likes of GTSI, CDW and Apptis Inc.Asked about competing against solutions providers such as GTSI, he said, "I guess we still view them as a catalog company. When you say solutions provider, to me that means a very heavily based engineering organization.""We don't consider ourselves a VAR," Casasola said. "We consider ourselves a value-added solutions provider."Amtower said Presidio's transition differs from GTSI's because Presidio is doing it through acquisitions. "What they're not doing is letting some of the acquired companies retain their name, and so they're losing brand equity. If customers know Presidio at all, it's as an IT product supplier, not a solutions provider. Changing customers' minds is a slow process."But GTSI and Presidio share one feature, Amtower said. "The migration into the services component puts them in a much more radically competed arena."Presidio recently was named to the NASA Solutions for Enterprisewide Procurement, a governmentwide acquisition contract for IT services."That's a big win for us," Casasola said. "We invested heavily in a proposals and business development group to go after some of these larger contracts, and we're having some good success on that front."Presidio Networked Solutions reported revenue growth of just over 20 percent per year during the past five years. A good portion of that came from providing IT equipment and architecture, design, implementation, and managed services to government clients such as the Air Force; Navy; and the Homeland Security, Commerce and Treasury departments.The company is providing Treasury with public-key infrastructure installations, which enable users on nonsecure public networks to securely exchange data through a cryptographic key pair, Casasola said."At Homeland Security, we're providing bodies, on-site support, program management, infrastructure, switches and routers, and servers," he said.As commercial organizations and government entities increasingly upgrade from the traditional time-division multiplexing technology to VOIP, there is a need to take the old equipment out of service. "That's where our remarketing company, Atlantix, comes into play," Casasola said.Atlantix buys and refurbishes old telecom equipment and then sells it to customers that are not ready to switch to the new VOIP technology. "There's a big market for that," he said. Presidio Networked Solutions and Atlantix operate as separate entities "because we don't want to mix used with new."Solarcom Capital can provide rental and leasing funding as needed, "so we can wrap the whole thing up in a very nice package for the client," Casasola said.Although federal spending in 2006 shifted increasingly to the war on terrorism and the Defense Department, "we did very well as far as our federal business was concerned," Casasola said, adding that Presidio is exploring the idea of building a relationship with Sun Microsystems Inc. for federal clients similar to its commercial relationship with Sun. "We're seeing a lot of uptick in storage space.We see a lot of growth there."