While the economic fallout from the COVID-19 pandemic has forced more than a few companies to rethink previous expansion plans over the past month, at least one Ottawa tech firm didn’t hesitate to pull the trigger on a major deal to expand its market share.
IT consulting firm Pythian announced late last week it has acquired Minneapolis-based Agosto. The 40-person U.S. company sells and administers Google’s cloud computing platform as well as the tech giant’s other cloud-based software products such as its G Suite collaboration tools and Chrome web-browsing platform.
Terms of the deal were not disclosed.
Founded in 1997, Pythian offers tech consulting and data analytics services to more than 750 customers, including big names such as Toyota, Fox Sports and online retailer Rakuten.
In addition to providing IT support and management to customers running platforms such as Google Cloud, Amazon Web Services, Oracle and Microsoft Azure, Pythian also uses big-data analytics to help food retailers and other clients with tasks such as managing their supply chains.
Recently, the company – which was itself acquired by New York-based private equity firm Mill Point Capital last fall – had been looking at branching out into the reselling space. Its executives already knew the team at Agosto, a fellow Google Cloud partner, and the two companies started talking about joining forces several months ago – long before the coronavirus began wreaking havoc on the North American economy.
“It just became obvious that if we could get this deal with Agosto, we could accelerate our (reselling) timelines significantly,” says Pythian president Keith Millar, adding he expects that cross-selling to each other's customers will boost Pythian and Agosto's combined sales by as much as $20 million over the next 12 months, in addition to other new revenues the acquisition will help generate.
“A lot of deals have fallen off the table. We just kept going and closed (the deal) last week.”
Agosto president Aric Bandy will now report to Millar, with the rest of the combined company’s management structure remaining in place. Agosto will continue to operate from its Minnesota home, and Millar is hoping Pythian’s new office will help it make further inroads into the U.S. market, where about 80 per cent of the firm’s customers are based.
The acquisition “just made a lot of sense,” he says.
Pythian now has more than 370 employees, 120 of them at the company’s Ottawa headquarters. In addition to its new Minneapolis location, the firm also has offices in New York, London and Hyderabad, India.
Although the coronavirus has battered the global economy and forced many companies to cut staff in the wake of plummeting sales, Millar says Pythian is holding its own. He says the company’s employees support “critical systems that customers rely on 24-7,” adding he’s confident Pythian will avoid the full brunt of the economic downturn and get back into hiring mode again sooner rather than later.
“There will be impacts, but they’re going to be much less for us than for many others,” Millar says.