MSPs Reveal Merger Plans

In an effort to bulk up to better compete against larger companies, managed service providers SiteRock Corp. and Avasta Inc. revealed plans to merge Wednesday. If approved by regulators and both boards, the two privately held service providers would unite under the Avasta name at that company's San Francisco headquarters. Financial terms were not disclosed.

The merger comes at a time when smaller, independent managed service providers find themselves competing with larger, more established services vendors such as IBM Global Services and EDS, which can simply add managed services to their full menus of systems-integration and outsourcing offerings. MSPs reached a brief heyday in 2000 by serving startup companies that grew too quickly to build or manage their own IT infrastructures. Although their services were in demand, their fortunes were largely tied to the rise and fall of dot-com companies.

Avasta CEO Thomas Engdahl will become CEO of the combined company if the deal closes as scheduled in June. His SiteRock counterpart, Tim Bacci, will join Avasta's board of directors. The newly combined company will have 60 employees and about 250 customers. Many of these customers, including Golden State Vintners and Financial Engines, come through partnerships that let SiteRock and Avasta provide managed services to customers of Accenture and IBM Global Services.

SiteRock is known for its application-monitoring services, which provide customers such as database software maker Sybase Inc. with reports outlining system and application performance. Avasta will add this monitoring and reporting capability to its customer portal and application-maintenance services. The companies plan to have their technologies integrated before the end of September.