Why Diversified Had to Acquire MCW

Published: 2017-10-10

CI’s 2016 Integrator of the Year, Diversified, is projected to reach the $650 million revenue plateau by the end of this year after its acquisition last week of Ashburn, Va.-based MCW, but chairman and CEO Fred D’Alessandro echoed a common refrain when asked about his company’s lofty standing.

“We want to be the best, not the biggest,” says D’Alessando, repeating a phrase he used after Diversified acquired Technical Innovation early in 2016 and added CompView earlier this year, among other major deals that have built Diversified up to about 1,500 employees after the MCW acquisition.

For his part, MCW president and co-founder Ghattas Hajjo wasn’t scared off by Diversified’s size or its succession of acquisitions, saying the eight to 10 months he and other MCW leaders spent talking to D’Alessandro and his team confirmed it was a good move to join forces.[related]

“We have cultures that mesh very well,” says Hajjo. “It’s rare to find that kind of synergy. We took [MCW] to the point where we either needed additional capital to acquire other companies to keep building on the success we’d had or needed to join a company that allowed us to expand the way we wanted to.”

MCW leaders chose the second option, joining the family of a fellow 2017 Inc. 5000 honoree, ending a process that Hajjo says was a couple of years in the making in terms of deciding which way to go.

“We wanted to position ourselves to have options,” says Hajjo, noting MCW turned down “quite a few” other acquisition attempts by other integration companies before joining Diversified. “We were a growing company and we were doing very well and Diversified wasn’t in a position where they needed to make a deal.”

Diversified Living Up to Its Name

With an electronic security business across the U.S. and Europe, MCW brings Diversified a solution set it didn’t have, says D’Alessandro, and strengthens the company with another division, joining business consulting, presentation technologies, unified communications, dynamic signage, live events, security, command and control, broadcast, medical and IT solutions.

“The market is driving the demand for this sort of all-encompassing solution,” says D’Alessandro. “We want to give our clients a single partner to deal with. It’s always been our vision to provide not only the broadest solution set, but the best. The talent and breadth we provide truly is unprecedented.” That includes AV, IT and security integration and managed services, he says.

MCW has a global security operations center and managed services offering, two areas where Diversified didn’t have a foothold, he says. With a headquarters near Washington, D.C., D’Alessaandro expects its newest addition to be a boon to Diversified’s work in the federal government vertical market.

Although MCW has only been under the Diversified umbrella for about a week, “we’re already bringing opportunities to one another,” says Hajjo. That’s a testament to the due diligence Diversified does on its potential acquisitions, says D’Alessandro, because it helps the cultures and employees mesh quickly.

MCW has major security initiatives in Amsterdam, Ireland and other parts of Europe today and expects to expand that service into London and other major cities across the continent thanks to this deal, says Hajjo. Its employees are mostly engineers and the company is particularly strong in designing and building data centers.

Industry Consolidation

Diversified’s acquisition of MCW—paired with AVI-SPL’s deal to add Sharp’s AV last week—means the industry’s two largest integrators are getting even bigger and two medium-sized competitors are being taken off the market. D’Alessandro and Hajjo see that as a function of the nature of the industry today.Diversified, MCW

“Because technology is changing so rapidly, it’s really hard for the smaller companies to keep up,” says D’Alessandro. “That’s what’s driving a lot of this.”

Hajjo says systems integration “remains a largely fragmented industry” but notes “customers are looking for a single partner who can deploy solutions around the world.” Buying power “is a big differentiator” for a larger company, he says.

D’Alessandro is comfortable the MCW acquisition puts Diversified “in the place we want to be right now,” but “we’re always looking at where the market is going.” Diversified has an office in Seoul, South Korea, and D’Alessandro expects the company to build more of a global footprint in the future.

The MCW brand will fade over the next 60 days into Diversified. D’Alessandro is excited to have Hajjo and his team as part of the family, saying leaders from Diversified’s previous acquisitions have helped the parent company grow stronger.

“Every company that joins us has a voice in making us a stronger company,” he says.

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