Agents After M&A: ARG Deal Took Northeast Beyond Telecom Sourcing

Four years after accepting an acquisition, ARG‘s Northeast consulting practice has seen its wallet share expand from telecom sourcing to advanced technologies.

So say the leaders of ARG’s Northeast division, which the D.C.-based partner acquired from Carousel Industries in 2018. The division was generating more than 70% of its revenue through connectivity-based sales prior to the deal. However, ARG executives say the Northeast practice is now generating the majority of its revenue through more advanced services, including cloud-based communications, managed IT services, security services and customer experience solutions.

ARG’s Mike Shonholz

That evolution stemmed from the combination of a long-established and deeply loyal customer base at Northeast, and methodology and resources at ARG that helped them expand their portfolio, according to ARG chief revenue officer Mike Shonholz said.

“Traditional telco services is still the plumbing,” Shonholz told Channel Futures. “That has to be right to enable the rest, but now it allows them to go go further in those relationships.”

The Divestment

Northeast historically belonged to Atrion, a regional VAR and telephony dealer. Atrion had built a deep Cisco business, ran a network operations center and also had built a managed IT services practice. The Northeast division, run by Darryl and Amy Senese, focused almost exclusively on the carriers. The Seneses’ team occasionally sold data center as well as hosted voice, but they said they mainly featured as a complementary resources to the main Atrion sales team.

ARG’s Amy Senese

“We would divide and conquer,” said Amy Senese, who now serves as senior technology advisor for ARG Northeast. “We would handle the circuitry and the connections, and our teammates and Atrion would handle the Cisco telephony, switching, routing, security and all those things.”

But in 2016, competitor Carousel Industries (most recently bought by NWN) purchased Atrion in a deal that solidified the combined company as a powerhouse MSP and reseller. However, Carousel already operated a telecom sourcing practice. Was there room for two agencies?

The team at ARG, including CEO Greg Praske, had engaged with the Seneses on advisory boards as well as through partnership. Shonholz said ARG reached out to them after the Carousel acquisition. Would they want to bring over their assets, employees and 400-plus customer base to ARG?

For Amy and Darryl, the purchasing company needed to share the same values, both in terms of how it treated its customers and how it treated its employees.

ARG’s Darryl Senese

“We did a lot of work in trying to align with an organization that culturally was a good fit,” said Darryl Senese, now vice president and managing partner at ARG Northeast. “And ARG was firmly at the top of that list.”

The Opportunity

Moreover, ARG was promising a new trajectory for the telecom sourcing business. That was to take Northeast’s existing customer base and go deeper with those companies.

“Most of the partners that we’re evaluating out in the marketplace have gotten to about 13% of the addressable wallet share for this agent/broker/trusted advisor community, and most of it’s made up of voice and network connectivity,” Shonholz said. “But we know there’s $297 on average available per employee that we can come in and help consult with our customers.”

Shonholz said about 25% of ARG’s projects revolve around …