Sourcepass, an MSP initially set up to grow by acquisitions of fellow MSPs, this month unveiled its third and fourth acquisitions, and is on the path to several more this year and next.
The two newest acquisitions, SSD Technology Partners and Total Technology Solutions, carry on Sourcepass’ mission of expanding to provide managed services, helpdesk services, cybersecurity and physical security, professional services, and custom web application development to a larger client base, said Ken Varrone, chief product officer for the East Northport, N.Y.-based company.
Sourcepass was founded with a plan to acquire MSPs, and started on March 1 of this year with the acquisition of Network Solutions and Technology with debt equity funding from Metropolitan Partners Group along with investment from angel investors and Wedge Venture Partners.
The company followed that acquisition a few days later with the acquisition of Suite3, an Easthampton, Mass.-based IT services and IT consulting company.ADVERTISEMENT
Sourcepass’ Network Solutions and Technology acquisition was made specifically as a platform for further acquisitions in the MSP business, Varrone told CRN.
“Our growth model has two parts,” he said. “We will grow by acquisition. And we will grow organically, which is why we hired our first CRO (chief revenue officer) a couple months ago.”
Sourcepass was founded with debt equity and some investment, which is different from how several MSP platform plays are made in which a private equity firm acquires an MSP to acquire other MSPs, Varrone said.
“Our debt equity play gives us the ability to operate as operators without the politics,” he said. “It lets us do what we need to do to grow. We’ve seen private equities come in and crush MSPs.”
Sourcepass’ goal is to exit 2022 with $100 million in revenue, Varrone said.
“That’s pretty impressive considering Sourcepass only started operating on March 1 of this year,” he said.
Sourcepass already has two more MSP acquisitions it expects to close in the next 40 days or so, and plans to close on two to four more by year-end, Varrone said.
The company looks for several key characteristics in its acquisitions, he said.
The first is a good cultural fit, Varrone said. “Finding talent is now ‘impossible’ in air quotes, and is even harder in IT,” he said.
The second is geographical footprint, Varrone said. Sourcepass now has offices from the Boston area to Washington, D.C., but is serving clients with offices in all 48 contiguous states, he said.
The first is a similar business model to that of Sourcepass to help simplify the integration, he said.
The fourth is the ability to bring in new verticals, especially those that help build resistance to things like recessions, he said.
Total Technology Solutions brings Sourcepass an expanded footprint in New York, and the combined company forms a good foundation for future expansion, Varrone said.
“They have some nice verticals we’re interested in, especially SLED (state, local, and education),” he said. “And they have amazing people.”
SSD Technology Partners also brings Sourcepass an expanded footprint with offices and people in the Delaware and Washington, D.C. areas, Varrone said. “And they also have amazing people,” he said.
Sourcepass does not typically go out hunting for potential acquisitions, Varrone said.
“We use existing networking groups,” he said. “We’re a very friendly MSP. Three of our four acquisitions so far, and one of the two upcoming acquisitions, came from our networking. And Sourcepass is making waves. We see people coming to us after hearing what we do. We have a pipeline of $250 million revenue in 10 months of operating. People see that, but they also see our mission and the clients we work with.”
Sourcepass is also investing in its own product development, including the building of a digital portal for its clients, Varrone said.
“If you ask a client if they had a good experience with us, they’d say yes,” he said. “But when we ask ourselves, we say no. We can always do better. It shouldn’t be easier for a client to order a PC online than it is to get services from us. We’re giving customers a form to fill out about their needs for a new user, which is then sent to our RPA (robotic process automation). Within minutes, it gets back to the customer with a service ticket showing the user has been set up and a list of services ready to go, all automatically.”LEARN MORE: Mergers and Acquisitions | Cybersecurity | Professional Services
Joseph F. Kovar is a senior editor and reporter for the storage and the non-tech-focused channel beats for CRN. He keeps readers abreast of the latest issues related to such areas as data life-cycle, business continuity and disaster recovery, and data centers, along with related services and software, while highlighting some of the key trends that impact the IT channel overall. He can be reached at [email protected].
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