Sparxent Start-up Begins Managed Service Provider and VAR Acquisitions

Sparxent, a start-up company based in Salt Lake City, Utah, is seeking to acquire managed service providers and VARs that generate roughly $5 million to $20 million in annual revenues.

The company, backed by vSpring Capital, today disclosed that it has acquired NetworkD Corp. of Newport Beach, California. Sparxent has also signed a letter of intent to acquire Arbyte of Moscow.

The VAR Guy spoke with Sparxent co-founder David R. Taylor to learn more about the company's ongoing acquisition strategy. Here are some highlights from the conversation.

  • War Chest: During its initial round of acquisitions, Sparxent plans to acquire companies with combined revenues of about $100 million to $120 million.
  • Experience: Taylor is a former general and channel executive at LANDesk. Co-founder Steve DeWindt is the former director of worldwide reseller sales at Intel.
  • Strategy: Sparxent wants to acquire multiple MSPs and VARs, and become an IBM Global Services or EDS of sorts for the midmarket.
  • Learning From History: The VAR Guy openly wondered if Sparxent's strategy was similar to the old USWeb, which acquired a bunch of Web design and integrator shops but collapsed during the dot-com implosion. Taylor recalls the lesson of USWeb, and says the Sparxent acquisitions will have minimal overlap in terms of technology focus, business focus and geography.
  • Don't Expect to Cash Out: VARs and MSPs looking to make a fast buck aren't of much interest to Sparxent. Instead, Sparxent is seeking to acquire companies whose management teams want to remain on-board in executive positions. Also, the acquisitions involve some cash but also heavy equity incentives tied to Sparxent's performance.
  • Back-end Systems: Sparxent won't be a pure integrator. Rather, acquired companies will plug into some sort of back-end Sparxent system -- perhaps a managed services or SaaS system. Details sound like they're still pending.
  • Next moves: More acquisitions coming. Stay tuned.
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