Dive Brief:
- U.K.-based value-added reseller and systems integrator Softcat expanded its North American business by acquiring Dallas-based value-added reseller GDT, the two companies announced Thursday. Private equity firm H.I.G. Capital sold its stake in GDT for an estimated value of $1.05 billion, H.I.G. said in a separate release.
- GDT will function as a wholly owned subsidiary of Softcat and keep its name and leadership, and Softcat will expand GDT’s Global Operations Center in Bangalore, India, according to the announcement.
- “We are in an age of consolidation, and we are in an age of globalization; this is a sizable transaction that hits both of those buttons,” GDT CEO Shawn O’Grady told Channel Dive.
Dive Insight:
O’Grady said Softcat convinced H.I.G. to forgo a prolonged sales process that would have meant months of courting potential buyers.
“Softcat very much wanted to skip ahead of that process,” O’Grady said. “They wanted to enter the U.S. with a statement.”
Softcat’s European rival Computacenter has already closed two North American acquisitions this year. Although Softcat surpassed Computacenter in UK revenue in 2021, Computacenter remains the larger of the two with its broader global footprint.
“If you really have ambition to be big in the industry, it's hard not to be in the U.S.,” O’Grady said. “It's not just the size of the market, but it's the proximity to the partners. Cisco, Nvidia, Dell, HPE — go down the list — they're all U.S.-based.”
O’Grady said GDT’s presence outside of North America was largely limited to U.S.-based enterprises with satellite locations.
Softcat is buying a company whose business profile has changed drastically since H.I.G. invested in GDT in 2021. At the time, GDT was a single-owner operation, run by its founder JW Roberts. The company’s roots were in network services and infrastructure for tier-one telecom carriers.
GDT expanded into cybersecurity and cloud data center infrastructure and services, growing its commercial customer base.
“The great thing about that is you couldn't pick a harder way to make a living,” O’Grady said. “Being able to deliver credible network solutions to tier-one carriers is not an easy gig, but they knew, ‘Hey, if we can do it for them, we can certainly do it for enterprises.’”
GDT added sales architects and consultants to target non-carriers, doubling its total salesforce.
The reseller also revamped vendor partnerships, building on a strong foundation with Cisco in the network market. Palo Alto Networks, NetApp and HPE have become key OEMs since the H.I.G. investment. Earlier this year, the company was named an Nvidia Elite Compute Partner.
Carriers have gone from approximately 80% of GDT’s customer base to 35%, according to O’Grady.
Softcat wasn’t looking to add telco customers, but the skills GDT picked up as part of its carrier practice were valuable, O’Grady said. GDT has amassed certifications in Cisco Internet and Mass Infrastructure architecture that telcos use to build networks. The same type of architecture will be a foundational element of AI infrastructure going forward, O’Grady said.
“It's not the fact that we have the carrier business,” O’Grady said. “What we developed as a result of having the carrier business that turns out to be extraordinarily relevant in artificial intelligence that makes it attractive.”
GDT will have the freedom to operate in the way its leadership deems best for the U.S. market, O’Grady said.
“It’s part of why they bought us,” he said. “They don't have to develop all that market knowledge themselves. They're buying a company that operates in this ecosystem already, and they're counting on us to do that.”
