By Khali Henderson

NetGain Communications in Reston, Va., announced Friday that it will merge its telecom agency operations into those of ARG Inc. of McLean, Va., effective May 1, 2010.

NetGain and ARG are two of the largest agencies in the mid-Atlantic area. Combined, the two companies serve more than 3,000 organizations ranging in size from 10 to more than 5,000 employees. Few customers crossed over. The acquisition will increase ARGs size by 15-20 percent, according to ARG CEO Greg Praske.

NetGains carrier contracts will be assigned to ARG where possible. Most suppliers were in common, but ARG will gain a few new ones, Praske said. Both agencies are among the largest for PAETEC, Praske said, noting NetGain has about two-thirds of its business with the CLEC while ARG has about 15 percent placed with the company.

NetGain will continue to operate and focus on its telecom expense management business unit, iTEMize Technologies, as well as new business lines such as energy expense management.

NetGain CEO Peter Callowhill and COO James Larsen will remain with the company, and become part of ARGs advisory board. Similarly, members of ARGs executive team will join the board for NetGains new energy business.

In addition, six of NetGains 15 employees one in operations and five is sales will join ARGs staff, which numbers 38.

Praske said the additional resources are welcomed since ARGs staff has been stretched by recent projects. And, the company was going to have to hire to keep pace with increasing demand.

By merging [NetGains customers] into ARG, we will add over 100 years of additional telecom experience to the ARG team, along with more than 1,000 customer locations, said Praske. This merger will position ARG to continue to aggressively build our network services business footprint in the mid-Atlantic market.

The principals at the two agencies have longstanding relationships dating back to the early 90s. Praske said Callowhill ran a Verizon agency through which ARG ran its business. In addition when Callowhill was co-founder at Net2000, ARG was one of its agents until the CLEC filed bankruptcy and sold its assets to Cavalier in 2001. Presently, NetGain runs its conferencing business through ARG. And, in 2007 NetGain joined the Agent Alliance, a networking and buying group that ARG founded in 1998 along with several other agencies.

I personally helped them launch their agency [in 2002] and over the years theyve built a very customer-focused, value-add agency, said Praske. Today, they are the second-largest agency in our market.

Aside from that history, Praske said the companies have a lot in common, including a direct sales model with an emphasis on a value-added consultative sale and ongoing customer support.

ARG has earned a well-deserved and enviable reputation for delivering the best customer care in the industry and we know our clients will be well served, said Callowhill. We know Greg and Steve [Praske, ARGs president] personally and share their core values for creating an environment where employees will thrive. We are very happy that NetGain associates will be part of the ARG team.

The companies have notified their suppliers of the transaction and will begin notifying customers on Tuesday, Praske said.