Cybersecurity is a big concern for many firms. It’s also a value creator for the IT-managed service providers Frontenac is rolling up with Integris.
“The need of clients for cybersecurity is real,” says Joe Rondinelli, who heads up Frontenac’s work in the IT-Managed Service Provider space. “It’s just getting worse.”
It was that thesis that drove Frontenac to recap a company called Domain Technology Group in 2020. The PE firm then helped complete a four-company merger in 2021 to form Integris. It hasn’t looked back since — making four more acquisitions since.
Integris’s latest deal was the acquisition of CalTech, an IT managed service provider for community banks based in Texas with operations also in Kansas. This brings the number of Integris offices to more than 20 in 11 states, as 700 employees offer enterprise IT services and 24/7 security monitoring.
CalTech’s cybersecurity services range from preventing e-mail spam to identifying attack vectors and containment when there is an incident. (The CalTech name, by the way, goes back to the software development company that founder Bob Calabrese started in his garage in 1988, and there is no relation to the California Institute of Technology.)
Community banking is a fragmented industry and is a prime target for an MSP like CalTech. Integris plans to leverage CalTech’s expertise to build up a national vertical for community banks.
“As technology becomes more sophisticated, it is difficult to recruit staff in these functional areas,” notes Rondinelli. “These banks try to keep up and compete.”
With the added capacity, Integris can move into other states. “Operations can be delivered from anywhere,” Rondinelli adds.
In addition to cybersecurity, Integris offers regulatory advice and compliance consulting as well as IT support.
“Many small- and medium-sized companies are operating with out-of-date computer systems and software,” says Rondinelli. “There’s a whole generation of companies that needs to upgrade.”
The MSP sector has strong appeal for a PE firm like Frontenac. “From an investor standpoint, it’s a customer relationship that is really sticky,” he says. This ensures the much-prized predictability of recurring revenue.
For MSP clients, the services enhance profitability and provide more stability. “Many of these banks can only afford one IT person,” Rondinelli says. “What if he gets sick, or leaves?”
Product engineering is another MSP field for Frontenac. The Chicago firm acquired California-based Motion Solutions in 2018 and this past August, the portco added to its capacity with the acquisition of another California firm, Ibex Engineering.
Frontenac’s 2021 acquisition of RCG Global Services in New Jersey emphasized digital transformation in the PE firm’s holdings of product engineering MSPs.
There will be more acquisitions for Integris in the next couple of years. “It’s one of the fastest-growing areas,” Rondinelli says. “Everyone keeps asking about cybersecurity.”