Diversified, based in New Jersey, has operated in the lower Northeast for years, but the integration giant has always eyed the enormous opportunities pouring out of the New England education and corporate markets.
The firm has a small Boston office, but CEO and founder Fred D’Alessandro has always wanted to expand the firm’s presence. That’s why acquiring HB Communications – a Connecticut-based integrator with extensive experience working in the Boston-area markets – was a no brainer.
“It’s really a great fit for us and expands what I think is one of our strongest territories here in the Northeast,” D’Alessandro told Commercial Integrator in an interview about yet another massive deal in the AV world.
According to D’Alessandro, the deal puts Diversified squarely in the “top one or two” on the list of the largest integration firms, up there with AVI-SPL following a $1.3 billion merger between that company and Whitlock that closed in April 2020.
This mega-merger puts Diversified over the $1 billion revenue mark and gives it about 2,500 employees, D’Alessandro says.
On and off conversations
In the niche industry of pro AV, everyone knows one another – especially executives of two industry leading firms.
The two firms both operate in Northeast, and the two CEOs have known each other for a long time and have had “on and off conversations” about merging the companies, but the ball really got going once the COVID-19 pandemic changed the way we use technology, Barron says.
Related: How to Survive and Thrive in a Period of Pro AV Mergers and Acquisitions
“The need for technology and the pent-up demand for what’s coming meant it was really the right time for us to pull the trigger,” Barron says.
The decision was made easier since both companies have similar mission statements and go-to-market strategies that put clients front and center of every decision.
“It’s one of the things that has always attracted me,” Barron says.
The lucrative Boston-area markets
The Boston area is full of opportunity for integrators, particularly in the well-established and mature education, corporate and biotech markets.
A quick look at HB Communications’ portfolio confirms that, with some projects including the Boston Celtics’ training center, Worcester Polytechnic Institute, University of New Haven, Salve Regina University, Mass Maritime Academy and more.
D’Alessandro singled out the higher education opportunities in New England, which according to the New England Board of Higher Education, is home to more than 250 colleges and universities.
“We do an average job with regards to capturing (higher education) clients, but we don’t have as many as we should as an organization,” D’Alessandro says. “HB’s focus in higher ed in the Boston markets is a perfect fit for us.”
HB Communications’ was previously only focused on education, as the company was previously called HB Educational Systems, says Barron, now the merged company’s vice president of business development for North America.
The company was founded in 1946 as “technology was starting to evolve everywhere,” but it largely started in the classroom, Barron says.
“We really cut our teeth in the educational space – almost to the point where we had so much education business that it really filled up our summers,” Barron says. “It got to a point where we really needed to diversity our portfolio.”
The company did expand into other corporate markets but retained that educational specialty as higher education in New England continued to evolve.
“That’s why we were so pedigreed in the educational sector,” Barron says.
A healthy AV market
The merger is among the first made since the onset of the COVID-19 pandemic and is the largest such deal of U.S.-based AV integrators since. Mergers and acquisitions in this space had been increasing in frequency and size for several years before the pandemic halted any growth prospects.
However, the industry is roaring back, with AVIXA saying the June AV sales index reached its second highest mark in the nearly five years the organization has been publishing the Pro AV Business Index.
Integration firms are seeing demand like they’ve never seen before, and Diversified is one of them.
“We have seen record bookings over the last quarter,” D’Alessandro says.
The corporate world had to quickly transition to a remote work model, and that is now changing to a hybrid model that will require the help of AV experts.
“It gives us a great opportunity,” D’Alessandro says. “It’s why we did this merger now – to capture that moment.”
