Trace3 Acquires Groupware To Expand Geographic Footprint

‘We’ll do more acquisitions,’ Trace3 CEO Rich Fennessy tells CRN. ‘Job No. 1 is organic growth. But we’re always looking for things to accelerate our strategies.’

Solution provider Trace3 is expanding its geographic footprint with the acquisition of fellow solution provider Groupware Technology.

With the acquisition of Campbell, Calif.-based Groupware, Irvine, Calif.-based Trace3 gains a strong presence in the Northern California and Arizona IT markets along with sophisticated cloud-focused technology and support capabilities, said Rich Fennessy, CEO of Trace3, which is ranked No. 39 on the 2020 CRN Solution Provider 500 list.

The acquisition of Groupware, ranked No. 83 on the 2020 CRN Solution Provider 500 list, marks Trace3’s second acquisition since the solution provider was acquired three years ago by H.I.G. Capital, Fennessy told CRN.

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Trace3 in August 2018 acquired Data Strategy, a Grand Rapids, Mich.-based solution provider that gave Trace3 a large market in the Midwest to go with its organically grown Southern California base, he said.

“We’ll do more acquisitions,” he said. “Job No. 1 is organic growth. But we’re always looking for things to accelerate our strategies.”

Having a large investment firm is very helpful in making acquisitions, Fennessy said.

“We sit down with H.I.G, and lay out the types of companies we are interested in based on geography and reputation,” he said. “H.I.G. will take the initial discussions. Then our management teams get together and look at if it makes sense.”

The acquisition of Groupware was one of those that made sense, Fennessy said.

“Clients are looking for partners with the capabilities to help them grow their business,” he said. “Their first question is, how can they get better? We are getting new sales teams and engineers to help our customers, and Trace3 brings new cybersecurity experience Groupware didn’t have.”

Trace3 also has a big focus on emerging technology via its own venture capital experience, Fennessy.

Groupware brings to Trace3 capabilities around cloud optimization, cloud billing, a sophisticated integration center in Northern California, and some very good Level 1 and Level 2 support capabilities, he said.

Groupware’s growth all happened organically, said Groupware CEO Mike Thompson.

However, Thompson told CRN, the company couldn’t pass up the opportunity to grow as part of a bigger organization.

“We are always looking at how to create additional opportunities for our customers,” he said. “With Trace3, we have a lot of commonalities. We were doing very well as an organization, but the acquisition is an opportunity to provide additional value and accelerate growth.”

While the COVID-19 coronavirus pandemic has not lessened the need for solution providers to grow and make acquisitions, it has changed how those acquisitions are made, Fennessy said.

“I’ve had the opportunity to acquire many companies over the years,” he said. “But this is the first time we did it almost exclusively over Zoom. We only had one face-to-face meeting. And we used a combination of DocuSign and ‘wet signatures.’”

The pandemic has made this a very unusual time to be in the channel, Fennessy said.

“But both organizations are growing, which is a testament to our ability to help clients deal with their technology and cybersecurity needs.”

Looking forward to 2021, Fennessy said he expects to see the acceleration of customers’ move to the cloud and the increasing need to do so in a responsible way.

“They will see security breaches increase and will need a sophisticated data center infrastructure to deal with the work-from-home push,” he said.