You already know that last week AVI-SPL acquired Digital Video Networks (DVN), a prominent AV and unified communication and collaboration (UCC) integration firm in the Southwest.
These days, there is seemingly an acquisition headline every few weeks with one of the nation’s largest AV integration firms scooping up a smaller competitor. The reaction is predictable. It leads to speculation about which behemoth integration company – Diversified or AVI-SPL – will be the first to reach $1 billion in annual revenue and indeed how the newly acquired revenue affects the pecking order at the top of the industry.
However, there is nothing routine about AVI-SPL’s acquisitions, says CEO John Zettel. “Even though it appears that we have acquired a lot of companies over the last three years, the truth of the matter is that we are actually very deliberate, very methodical about not only the acquisition but the integration” of the companies and employees, he tells CI.
So what’s unique about the acquisition of Scottsdale, Ariz.-based DVN and its Tucson, Ariz.; Albuquerque, N.M.; and Salt Lake City, Utah? CI talked to Zettel and DVN co-founder Bill Blair to get the inside story.
Geography of AVI-SPL’s Acquisition of DVN
It had become an all-too-common occurrence, Blair says, that DVN’s larger enterprise customers in the Southwest were looking for integration support for locations across the country. “We’d have to answer, ‘No, but we’re damn good at what we do in the Southwest,’” he says.
He describes way too many opportunities with Southwest clients that they had to forfeit (or forfeit all but a portion of) because they required national scale. “When I looked at the AVI-SPL geographical map I said this is kind of a natural fit because the three states we are in they kind of weren’t.”
On the flip side, Zettel saw something similar. With the acquisition, “We’re getting four brand new offices within the Southwest,” he says.
“When I looked at the AVI-SPL geographical map I said this is kind of a natural fit because the three states we are in they kind of weren’t,” Blair says.
“We did have Denver and California. But with the growing markets especially in Scottsdale and Salt Lake City we thought that it was necessary to have a direct physical presence in those areas. Then, as a bonus, we get Tucson and Albuquerque.”
As for why those physical locations were important, “We can continue to serve our global customers on a consistent basis,” he says. “We can be able to provide them not only integration but the services. With the speed at which we need to provide those services the geography becomes critical.”
One Really Important Flight
As Blair and his wife were flying to InfoComm 2018 in Las Vegas they struck up a conversation with the third person in their row — Nicholas Cammarata, director of corporate development for AVI-SPL.
“Nick has done a lot of work for AVI-SPL in finding merger candidates,” Blair says. “When I looked at his card I thought this is interesting but I’m not ready to make a move just yet. But when they started thinking about the Southwest Nick remembered that and called us up. That’s what I understand anyway. It turned about to be a good move.”
$1 Billion Question
Zettel understands why CI continually asks him, after each acquisition, about the race to $1 billion in annual revenue – but that doesn’t mean it’s his favorite topic of discussion.
“The truth of the matter is we’re going to hit $1 billion in the near future,” Zettel says.
Obviously, the acquisition of DVN edges AVI-SPL closer to $1 billion in annual revenue – a mark that Diversified expects to reach relatively soon – but Zettel opts not to share specific revenue numbers attributed to the DVN acquisition.
“The truth of the matter is we’re going to hit $1 billion in the near future,” Zettel says. But he also explains why he doesn’t like to zero in on that topic.
“AVI-SPL absolutely looks at level of revenue every year, but we do it because it is a benchmark against ourselves,” he says. “We have very defined measures of what we want our growth to be every year. So I’m not going to say revenue is not important. You are who you are and every year we want to grow on that. But, really, when we talk internally we talk about providing the best customer experience. Whenever I talk to our employees I say it’s not nice necessarily about hitting the $1 billion mark, but the $1 billion market gives us a point to reflect on all the work we’ve done to get to that point.”
Zettel insistes AVI-SPL isn’t in a race with Diversified (or any other integration firm) to get to $1 billion. Instead, “I look at our growth in revenue as the affirmation that we have built a world class digital workplace service provider in this industry.”