Dive Brief:
- Managed services provider Harbor IT acquired ComTech Computer Services to expand its midmarket-focused platform, the companies said in a joint announcement Wednesday.
- Harbor IT’s ninth acquisition adds a cybersecurity practice and a foothold in the Research Triangle. North Carolina-based ComTech specializes in life sciences and manufacturing customers, which aligns with Harbor IT’s healthcare and critical infrastructure practices, per the announcement.
- Harbor IT will fully integrate ComTech into its business, layering new lines of business into customer accounts via other specialist practices it has acquired. “We've gone through the grueling work to take our medicine and do what we believe creates the most sustainable business,” the company’s CEO Johnny Lieberman told Channel Dive.
Dive Insight:
Specialization and integration are cornerstones of Harbor IT’s strategy to land midmarket customers. Backed by Worklyn Partners holding company, the IT services firm has acquired firms with technological and vertical specializations and integrated them into its operating model.
“If you fully integrate the Cisco network engineering business with the cybersecurity XDR and SOC business with the business that does Microsoft engineering, you end up with a more technical platform with real depth that already serves the midmarket,” Lieberman said.
The MSP is trying to stand out in a crowd of consolidation platforms. Most MSP roll-ups want to move upmarket from SMB, but one-plus-one doesn’t always equal three in M&A.
“Everyone says they're midmarket focused once they get to a certain scale, but the ones that acquired 15 SMB focused MSPs can't just overnight shift their focus on marketing, because the capabilities to serve the mid market are fundamentally different,” Lieberman said.
Midmarket clients increasingly demand a single MSP, rather than divvying up managed services contracts.
“You used to have companies arguing for separate cyber and IT, like church and state,” Lieberman said.
Harbor takes on end-user support, compliance, cybersecurity and disaster recovery, Microsoft and cloud licensing, networking and infrastructure application maintenance. It typically leaves the customer’s IT team to focus on app development in conjunction with lines of business.
The process has been more painful than a pure arbitrage play. Lieberman said. Specialized MSPs often don’t want to sell, and when they do, patience is required for the cross-sell opportunity to come to fruition.
“We can't just spray it and pray,” Lieberman said. “We're looking to fill in a capability that we don't have, or to further our penetration in one of the three practice areas that we focus on, and that was the case with ComTech.”
