Synoptek Buys EarthLink’s IT Services Division

February 1st, 2016 by · 6 Comments

EarthLink made a move this afternoon to streamline its business, selling off its IT division to Synoptek.  The deal more than doubles Synoptek’s size straight off the bat, bringing in 1,700 IT services customers to join their existing 400+ worldwide.  It gives them a deeper network footprint, particularly on the east coast of the US, and adds a complementary data center footprint.  

Synoptic itself saw new owners come in just two months ago, with Sverica Capital Management taking the reins.  It’s no accident that their arrival has been followed so closely by an acquisition that boosted their scale significantly.

Meanwhile, EarthLink will be continuing with the rest of its business, which is increasingly network focused.  One has to speculate that there could other shoes to fall here soon.  EarthLink’s management did a great job in the eyes of the markets in cleaning up the company’s business last year, but it’s been clear that strategic alternatives have been a part of the plan for a while. escort genève xannonce

EarthLink’s IT services division was generating $37M in annual revenue, which is only about 3% of the company’s revenues.  Some 210 EarthLink employees will be making the transition as well, which is about 10% of their headcount as given at the end of the third quarter of 2015.

The pricetag was $29M, subject to post closing contingencies.  Bank Street and Troutman Sanders advised EarthLink on the financial and legal aspects of the transaction, respectively.

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Categories: Managed Services · Mergers and Acquisitions

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6 Comments So Far

  • Rolla huff says:

    Synoptek got some great employees coming their way….Big loss for EarthLink talent wise.

  • mhammett says:

    So is this just a portion of Earthlink’s data center footprint or is it all going?

    • Rolla huff says:

      It all went to Synoptek, including the talent….

      • mhammett says:

        So if I see Earthlink’s name on a datacenter door now, it’s going to be Synoptek soon or does their network have POPs places that could be considered datacenters and not just a rack or two in someone else’s space.

        Earthlink wasn’t much of one for peering, so wondering if I have a new lead to chase in the markets with Earthlink doors. 🙂

  • Ray Finkel says:

    They made an announcement a year ago that they were spinning off assets to invest cash in growing businesses. Years ago they were going to transform the business from
    a CLEC to an MSP. If you sell off that portion of the business what is left? Selling off Data Centers seems to be the “In Thing” reading the headlines. They shopped around their fiber and that never sold, I guess this was the next available asset.

    I am sure just like any new regime they brought in new people that said “yeah, I can fix that.” only to learn how broken things are in the back office.

    They announce earnings in a few weeks. I would expect them to make a major announcement to shop around or sell off the company as part of Q4/YE earnings. There are lots of cost saving measures going on and not alot of growth. They are trying to get as much debt off the books to make the sale look better to Wall st.

    Looking at the M&A polls from a few weeks ago they were ranked 4th. I think they just went to the top of the list today.

    Earthlink is making this announcement just in time for the Superbowl. Earthlink needs a Cam Newton and not a Jim Kelly.

    Scott Norwood for the win!…….Just a bit outside.

  • Grant Lewis says:

    Not even 1x revenue on the IT assets. Looks like ELNK was desperate to get rid of something they clearly had no idea how to manage and operate. How do the BOD think this is in the best interest of the shareholders? Unless of course they are prepping to bream the company apart in additional sales and this eases any possible confusion over what to do with it. From my perspective, quite the change in direction from just a few years ago. Hopefully the new owners will make something of this…..

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