Smee eyes more deals after grabbing VAD Alpha Generation

Management team, including MD Stuart Reay, will stay on at Nottingham-based distributor as deal to sell 100 per cent stake to 4Sec Group is finalised

Grahame Smee says he plans to make more acquisitions to bolster his new group of channel companies, 4Sec Group, after swooping on security distributor Alpha Generation.

Having unveiled 4Sec Group in January with launch vendors CensorNet and Entrust Datacard, Smee (pictured) yesterday finalised a deal to buy a 100 per cent stake in AlphaGen.

AlphaGen, whose headline vendors are Thycotic, Flexera Software, Corero and BlackStratus, will now act as 4Sec Group's value-added distribution arm.

More acquisitions are likely as Smee builds out other complementary capabilities within the group, he told CRN.

"The group structure is gradually panning out," Smee said.

"AlphaGen is effectively the VAD of the group, but this isn't the end of the group. It's likely we will make further additions; we are going to build a channel business that is interesting and relevant to vendors and partners."

Nottinghamshire-based AlphaGen was itself launched in 2013 by the management team behind Arc, which they sold to Exclusive Networks in 2009.

AlphaGen managing director Stuart Reay, sales director Chris Walsh and marketing director Mark Weatherill will all continue in their current roles following the deal, terms of which are undisclosed.

Although AlphaGen and Smee first struck up a dialogue last November, Reay and Smee were in talks about a possible partnership as far back as 2008 when the duo were running Arc and Cohort, respectively, Raey (pictured below) said.

"It's been a long time in the making," he said.

"[Grahame] has really good connections and experience in the channel, so he's absolutely appropriate as a business partner. He comes from the same sector as us and has been involved in building companies and selling them. With his experience and contacts and strategy, I feel we can get to where we want to much faster working with Grahame."

All 17 of AlphaGen's staff will stay on, Smee said, adding that a southern office will probably soon be launched.

"There is not a single person who is leaving the business as a result of this acquisition," Smee said. "In fact, it's the opposite: we will be adding headcount, particularly in the south, to make sure our vendors get the support they're used to and more so."

Smee launched 4Sec Group following a stint at one of its two vendor partners, CensorNet. Before that, he founded and built up security VAD Cohort, before selling it to Exertis in 2013 for an enterprise value of £5m.

Smee was enigmatic about the exact nature of his plans for the group.

"We are building something that will hopefully be different from what other people are offering in terms of channel companies," he said. "We will be entering some other areas which will gradually become more apparent in the coming weeks."

Sam Murdoch, a director at security VAD Securicom, said deal activity is being fuelled by the fact that market newcomers such as 4Sec don't have the luxury of time to build up a business in the cybersecurity space if they are to strike while the iron is hot.

Securicom has already been approached by two suitors, despite only starting to trade last June, Murdoch said.

"AlphaGen have built a very good company and I thought they were on a growth path and wouldn't sell up yet. Companies are being bought before they want to sell. We took on GuardiCore at zero dollars in the UK and are on the trajectory of being at eight digits in a three- to four-year plan. We have a certain plan we want to stick to, and I'm sure Ignition are the same. It's about weighing up when is the best time to sell.

"4Sec are buying time; they are buying the fact they haven't been in the market for one or two years. It's the vendor contracts AlphaGen have. Thycotic is a very good vendor, and if you look at Cylance for Ignition or GuardiCore for us, they want to go with one distributor to start with. So people are buying those vendors, and the blood, sweat and tears these people have put into the company. Grahame has done this three times before and obviously wants to accelerate the process of being bought by one of the larger distributors."

Ian Kilpatrick, executive vice president of cybersecurity at distribution group Nuvias, and chairman of Wick Hill, said: "My congratulations to Stuart and the team - I'm delighted for them."