We learn what the big change will mean for partners and the reaction thus far from the channel community.

Edward Gately, Senior News Editor

February 14, 2019

7 Min Read

TPx, the managed services and connectivity provider, took the channel by surprise this month when it announced it is combining with Pensare Acquisition Corp. in a $343 million transaction to become a Nasdaq-listed public company.

Pensare already is traded on the Nasdaq, and when the transaction closes, it will be renamed TPx Corp., trading under the ticker symbol TPXC. Pensare will pay $248 million in cash and $95 million in equity to TPx equity holders.

Dick Jalkut, TPx‘s CEO, said Pensare is a special purpose acquisition company (SPAC), a “blank check” firm that looks for companies to acquire and bring to the public market.

Agents will continue to work with the same channel managers they do today and the TPx management team will remain the same, he said.

TelePacific Communications rebranded as TPx in spring 2017 and provides UC and cloud-focused managed IT services, including cloud connectivity, SD-WAN and managed security, with about 30,000 customers nationwide in more than 53,000 locations.


TPx’s Jim Delis

In a Q&A with Channel Partners, Jim Delis, TPx’s senior vice president of national channel development, tells us more about reaction from partners and what to expect when the deal closes.

Channel Partners: Has going public been a goal for TPx?

Jim Delis: Yes, it has actually. My tenure with TPx is just about two years, but the company’s been an organization for 20 years and during that time — in fact, for most of those years — the CEO has been Dick Jalkut, who is known in the industry and has spent a phenomenal career leading telecom organizations. Had there been an opportunity, this would be something that he may have taken in the past, but so far what the company did was to make nine acquisitions in the current private form and then of course in the last several months this started to develop and our CEO jumped on that opportunity.

CP: What’s been the reaction from agents and other partners?

JD: So far, we actually had a partner advisory council just last week and we invited 11 of our top-performing master agents and selling partners for TPx. We had Dick Jalkut join the meeting and did a very detailed review of our intended public venture here with Pensare. And I’ll tell you the reaction was great from that group of partners. Every partner has questions to make sure, “Hey, will I be taken care of? Is my revenue…

…stream secure?” and the answer is yes. But the reaction from partners was one of a very positive nature and I think they can see and believed the things that we were telling them that this will just allow TPx to grow faster than we have in the past.

CP: What’s happening now in terms of working with partners? Is it business as usual?

JD: Completely. In fact, it is business as usual today, no change in the way we interact with partners, with our team, our structure. Hopefully the kinds of service we give is something that’s given an A rating here, but in terms of the way the business operates, we expect it to continue. In fact, we expect it to continue in the same fashion only maybe with some accelerated growth opportunities after the close of this transaction.

CP: Can you elaborate more on how this will benefit partners?

JD: The first thing is just to make sure that we allay any partner’s fears or worries. This merger to go public with Pensare Group doesn’t bring with it a merger of two operational organizations. Pensare is a group that essentially had a fund designated for technology purchases, for the purchase of a technology company, and so it was a financial vehicle and not an operational company. There are no organizational changes, there are no back-office systems to integrate because of this purchase. What there is now is just a company with a balance sheet that will allow us to grow faster.

As we have become TPx and made the pivot in our business to become a national managed services provider, we have built that model of our national expansion through partners only, and now when this transaction is complete, we think that we’ll be able to expand more quickly. So what we hope is a benefit to partners is that not only have they seen us expand into the managed services product and services line, and move into new markets, but we hope to see that with more visibility, with more resources and even at some point a more robust road map for things that we will deliver with products and services. So I think there’s lots of reasons that hopefully partners will feel excited about.

CP: Will TPx be receiving additional funding from going public? If so, how will that benefit partners?

JD: The whole concept…

…of going public is we expect to be traded on the Nasdaq exchange under the symbol TPXC when we’re done, so there’s public investors that can make the decision to be part of the TPx shareholder family. And of course it’s contingent upon having the funds that Pensare made available to help pay down some debt and infuse more cash into growth. So we will have dollars to make the next decisions for the company once this is done.

CP: Any potential drawbacks from going public, such as pressure and scrutiny from shareholders?

JD: TPx is run by an executive management team that’s familiar with public companies, and of course the CEO is well-versed in it, our chief financial officer is well-versed in this and Pensare, our partner, obviously understands it as well. We’ve been a company with great growth — consecutive, quarter-over-quarter growth for 65 quarter — and we just expect that will continue. But we will tell Wall Street in a public fashion now. That’s probably the biggest change for us.

CP: A lot of TPx’s competitors already are public. How will going public come into play in the competitive landscape?

JD: As TPx made its pivot to managed services, that’s been a very important change for us and we’ve made that. In fact, I think that we as a company with agreement from our partners now believe we have successfully made that pivot. Our sales numbers and the types of customers we bring on indicates that we are now in that managed services playing field for UCaaS and our IT solutions, and that’s who we want to compete against, and this allows us to move faster, be bigger and faster at a more rapid pace. There’s a lot of customers today in the business world making decisions for the purchase of these kinds of managed services now and we expect to get our fair share. And being a public company, I think, helps us compete better in that space.

CP: Any particular goals in terms of growth, whether geographical or additional capabilities?

JD: We’re still early enough that those kinds of decisions haven’t been solidified, so I wouldn’t be able to get more specific at this time except to say that in the categories of our product road map, the quantity and quality of our employees that we install in our various markets, we expect to be able to…

…have a bigger presence in these expansion markets and we expect to be able to provide more services. That will start to unfold as we prioritize business directions as we get a little bit closer.

CP: Anything you would like to add or want partners to know?

JD: Part of the stay tuned is that we think things will continue to develop, and that every interaction that we have with our partners, whether through events like the Channel Partners shows or our interactions as we transact business … we will be sharing information in the small and large settings from now until this is completed. So obviously there will be lots of ongoing communication there. And certainly what I would want partners to know is just simply this: If at any time or place any partner has any concerns, obviously we will address them. But generally, when we complete this transaction, we expect to continue our very strong relationship with our partner community. The partner business equates to about half of all of the business we do and as we expand, we believe that that percentage of business will get even greater as we enter new markets that we weren’t currently in in the days when we were referred to as a CLEC.

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About the Author(s)

Edward Gately

Senior News Editor, Channel Futures

As news editor, Edward Gately covers cybersecurity, new channel programs and program changes, M&A and other IT channel trends. Prior to Informa, he spent 26 years as a newspaper journalist in Texas, Louisiana and Arizona.

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