Chicago data center Steadfast Networks has made its third acquisition of the year, buying consulting firm Radius IT to better serve the financial services sector.
Steadfast, which is targeting annual sales of more than $6 million this year, generally prefers to grow through sales, but the company turned to an acquisition strategy this year partly because valuations were low, said president Karl Zimmerman. Steadfast gained five employees in the Radius IT transaction, and the acquired company is now Steadfast Financial Networks Division. Terms of the deal weren’t disclosed.
With the acquisition, Steadfast adds a consulting component to its core offerings of data center resources, colocation and network resources. Radius IT focused on procuring hardware and data center locations for clients. “We’ve had a growing number of financial customers and we’d like to better serve those customers and offer them a more complete line of services,” Zimmerman said. “With both of our resources combined, we can provide end-to-end solutions on the IT side to get them the hardware, the colocation and the engineering to put it together for them.”
Radius brings customers
Located at 350 E Cermak Road in Chicago, Radius operates in the same building as the Chicago Mercantile Exchange, one of its clients. Radius IT’s customer base includes electronic trading companies, options traders, hedge funds and investment banking firms. The deal grew out of a healthy partnership between Steadfast and Radius IT, Zimmerman said. As the two companies engaged in more work together, the acquisition made sense.
Usually, Zimmerman said he prefers to grow Steadfast organically. He started the company as a web hosting firm in 1998 at the age of 14, then moved into dedicated servers in 2003.
Low valuations a factor
“Generally, it seems to be easier to spend that money acquiring the customers directly ourselves and not having to integrate someone else’s solutions,” said Zimmerman, who started the company as a web hosting firm in 1998 at the age of 14, then moved into dedicated servers in 2003. “Most acquisitions seem to be overpriced, but in the currently economy, values have been more reasonable.”
Steadfast acquired New York NOC, a virtual service provider, in January. “We’ve had demand for service in the New York area,” Zimmerman said. The company also acquired VPS Speed, in June, which allowed Steadfast to accelerate the virtualized side of the business.