Channel Partner Acquisition During COVID-19 Tests How Both Sides Work In Crisis

The acquisition by Chesapeake Systems of StorExcel, which was closed during the COVID-19 coronavirus pandemic, came about only after the two companies partnered in the digital content market to make sure they could work together well.

Chesapeake Systems, an integrator with a focus on the media and entertainment market, is looking to diversify its business with the acquisition of StorExcel, which has a focus on the government market.

The acquisition, for which no dollar value was provided, makes the government market a new strategic focus for Chesapeake Systems, said Jason Paquin, CEO of the Baltimore-based solution provider.

However, Paquin told CRN, the acquisition of Denver-based StorExcel is not driven solely by a push for government business.

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"We want more diversity in more market segments," he said. "Over the last 15 years, Chesapeake Systems has focused on media and entertainment, and has clients doing digital brand activities including sports teams. By expanding our diversity, we will have more reach into different markets."

The two signed the acquisition agreement on April 21, Paquin said.

The COVID-19 coronavirus pandemic had both negative and positive impacts on the acquisition, Paquin said.

"On the negative side, we had to slow down to make sure we were doing things at the right time," he said. "But on the positive side, we went through COVID at the same time. We saw how we could work together during a crisis. We came together and built a strong organization. And we showed that we can come together during a crisis."

Chesapeake Systems was also successful in applying for a government loan under the Payroll Protection Package, or PPP, program aimed at helping small businesses continue operations despite the damage caused to the economy by the COVID-19 pandemic, Paquin said.

"It's a common trend for everyone in the channel," he said. "We're making sure we have every resource possible to stay financially sound through this crazy time," said.

Lance Hukill, president of StorExcel until the acquisition and now vice president of sales at Chesapeake Systems, told CRN that his company's customers were mainly government organizations, including NASA, the Department of Veteran Affairs, the Social Security Administration, and the House of Representatives, all of which worked with StorExcel on digital content.

"For instance, the House of Representatives has its own House recording studio, with people providing digital content, live content, and B-roll content," Hukill said. "They want to tag information in an information management system for searching, distribution, and archiving in the Library of Congress. We manage the entire workflow from content to archive."

An expanded government presence is something Chesapeake Systems has been looking at for some time, Paquin said.

"We see an ability to expand our sales leadership in existing clients while bringing in a government focus with StorExcel," he said.

Prior to the acquisition, the two companies had already partnered on a large, on-going project which let their sales teams work together and see how they mesh, Hukill said. He declined to name the client as the project is still being deployed.

Paquin said the culture of partnership is important to both companies.

"This became clear as we worked together," he said. "That was a good starting point to see how we could work together as a single company."

Chesapeake Systems and StorExcel started talking about a possible joining of forces early in the fourth quarter of 2019, Paquin said.

"I approached Lance [Hukill] to talk about ways to expand our business," he said. "We looked at partnerships so that if the acquisition didn't work, we could expand our partnership into the future."

Paquin declined to discuss the two companies' financials, but said both were profitable businesses. With the four people joining from StorExcel, Chesapeake Systems now has a total of 36 employees, he said.