Information on the Target

CMIT Solutions, a premier provider of enterprise-class IT solutions for small and medium-sized businesses, has expanded its portfolio through the acquisition of Velox Systems, a managed service provider based in Central Oregon. This strategic move incorporates Velox's expertise in advanced automation and Cybersecurity Maturity Model Certification (CMMC). Jordan Smith, the CEO of Velox, is set to continue in his role, ensuring a seamless transition for both employees and clients.

With a network that spans over 270 locations, CMIT Solutions specializes in aiding businesses in the planning, implementation, management, and security of their IT systems. The integration of Velox's CMMC certification will empower CMIT to serve clients in highly regulated sectors, including aerospace, healthcare, and government, providing a robust cybersecurity framework and optimized IT operations.

Industry Overview in the United States

The managed services industry in the United States has witnessed significant growth over the last several years, driven by the increasing demand for IT solutions that can automate processes and ensure cybersecurity compliance. Companies of all sizes are transforming their operational models to incorporate IT services that help them remain competitive in an ever-evolving digital landscape.

Demand for cybersecurity services, particularly those compliant with CMMC standards, is at an all-time high, especially among businesses that service government contracts. This trend has bolstered the growth prospects for firms like CMIT Solutions and Velox Systems, which are well-positioned to meet the regulatory and technological needs of clients.

The rise of remote work and the increasing reliance on digital tools have further accelerated the necessity for robust IT systems, with small and medium-sized enterprises oftentimes lacking the resources to manage these independently. As a result, the managed services sector is expanding rapidly, creating opportunities for providers focused on delivering tailored solutions.

Furthermore, many organizations are recognizing the value of outsourcing their IT needs to dedicated services providers. This realization is driving market growth by allowing businesses to concentrate on their core operations while entrusting IT management to experienced professionals.

The Rationale Behind the Deal

The acquisition of Velox Systems is a strategic decision by CMIT Solutions aimed at bolstering its service offerings and enhancing its competitive edge in the rapidly evolving IT landscape. The integration of Velox’s advanced cybersecurity solutions and automation tools will not only improve operational efficiency but also expand CMIT's ability to cater to clients in regulated industries that require compliance with stringent standards.

This partnership also reflects CMIT's commitment to evolving with market demands, ensuring that they can provide scalable, high-performance IT solutions to their growing client base. By acquiring Velox, CMIT aims to enhance its capacity for innovation and service delivery, ultimately benefiting their clients through improved technology and support.

Information About the Investor

HKW is a distinguished middle-market private equity firm that specializes in investing in companies with skilled management teams across the United States and Canada. With a focus on sectors including manufacturing, distribution, and business services, HKW has a history of sponsoring platform transactions and add-on acquisitions since its founding in 1982.

By partnering with firms like CMIT Solutions, HKW demonstrates its commitment to nurturing businesses that exhibit potential for growth and innovation in their respective markets. Their targeted approach and industry expertise equip them to create substantial value within their investment portfolio.

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The acquisition of Velox Systems by CMIT Solutions represents a strategically sound investment that enhances CMIT’s service capabilities and positions it favorably within the competitive landscape of managed IT services. It expands CMIT’s cybersecurity offerings and meets the critical compliance needs of businesses in regulated industries, which is increasingly important as cybersecurity threats rise.

Moreover, integrating Velox’s automation technologies supports CMIT's goal of improving operational efficiencies and client satisfaction, thereby enhancing its overall value proposition. This not only fulfills existing client needs but is likely to attract new customers seeking reliable and comprehensive IT solutions.

From a long-term perspective, the partnership is poised to create synergies that contribute to growth, especially given the increasing reliance on outsourced IT services. The strategic foresight demonstrated by both firms signals a commitment to meet evolving market demands and reinforces their collaborative potential for future successes.

Ultimately, this acquisition is likely to be a prudent investment, positioning CMIT to deliver enhanced services and meet the growing needs of businesses in an increasingly complex digital environment.

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