Exclusive Group has established a presence in the US after acquiring networking security distributor Fine Tec.
Founded in 2000, Fine Tec employs around 30 people in San Jose, California. The firm turned over $230m (£178m) in 2016 and brands itself as a value-added distributor in network security, data integrity and storage solutions.
Last month Exclusive hinted that US acquisitions could be imminent, with its buy-and-build strategy set to cross the Atlantic.
Speaking to CRN sister publication Channelnomics Europe, Fine Tec's CEO James Shen said that his firm is the "US market leader" for security vendor Fortinet, one of Exclusive's most valued brands, while also working with vendors such as Array Networks and Algosec. The deal will take Exclusive's revenues for the year to over £1.5bn.
Barrie Desmond, chief operating officer at Exclusive Group, said that the acquisition will act as a springboard for further US expansion, claiming that Fine Tec will enable the global VAD to add new vendor names to its existing operations.
"We have been looking to establish a programme in the US but we do not hurry these things. We needed a partner with similar DNA and a similar philosophy to ourselves and a good crossover of vendors and this is what we have found with James and Fine Tec.
"It is a fantastic business, we share a number of vendors, the main one being Fortinet - they are the market leader in Fortinet in North America. This provides us with a fantastic beachhead into the Americas and we are excited about this partnership and the opportunity it brings out vendors," he said.
Desmond said he expects Fine Tec to fall under the Exclusive brand in the next six to 12 months.
"We think there is a fantastic opportunity for Fine Tec to address a whole portion of business that they currently have not been able to address. Here are quite significant global deals that need our global expertise and footprint and we want to accelerate and build on the momentum they have got with Fortinet," he said.
"Stage two will be to look at synergies with other vendors. We cannot rush these things; we want to do a good job. There has been a lot of pressure from other vendors asking when we are going to be in the US."
He added: "First is to get things up and running, then do the integration, then we will run dual brands, then in six to 12 months the Exclusive brand will be established."
Shen claimed that in the last 10 to 15 years Fine Tec has maintained an average revenue growth rate of 30 per cent. The former CEO will maintain a 20 per cent stake in Fine Tec, and join Exclusive as part of the acquisition becoming the firm's vice president of the Americas.
"In a very short time we will need to invest further in the US," said Desmond. "Even if we achieve just 50 per cent of what their operation is, it will mean more accelerated growth and we will continue that 30 per cent year on year growth."
Sticking with the start-ups
The Exclusive brand has long been associated with taking start-ups and lesser-known vendor names into its portfolio. Desmond said the firm's affiliation with younger brands will not change in the US, claiming that the move will put Exclusive in closer contact with Silicon Valley's start-up community.
"I think it will be a blend [of established and lesser-known brands]. It is about building a sustainable model and it is about having a good portfolio of vendors we can trade with. But also in many respects, it brings us closer to the start-ups in the US. Straight away, instead of waiting for them to get on a plane and find us, we have got a runway here," he said.
Exclusive hired ex-Westcon exec Pat Huth to spearhead vendor and partner alliances for the Americas last month. Huth is tasked with bringing the firm's current portfolio to the US and gaining traction among global systems integrators.
Along with the announcement, Desmond told Channelnomics Europe that continuing the firm's aggressive buy-and-build strategy in the US was "very much on the agenda" and Exclusive wished to establish substantial presence stateside "sooner rather than later".
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