“I’m like an old dog in this industry.” Bob Cagnazzi has seen a lot of change over his career but that has been supercharged in the past few years, as the Covid-19 pandemic and the subsequent turmoil caused a lot of change in the market.
But the Presidio chief executive has managed to navigate it all so far.
The company provides services such as IT procurement, cloud computing, network services, data centre and managed services to organisations that range from government agencies to private sector businesses such as Amazon, Dell Technologies, Cisco and Intel. Globally, it has more than 8,000 customers, and like many technology companies, the pandemic-induced surge in demand for IT services boosted its business.
Cagnazzi has significant experience in the technology sector, having spent more than three decades leading technology companies, including Integrated Systems Group and later Dimension Data Holdings.
His route to Presidio was through the company he founded, Bluewater Communications, which he led from its establishment in 2006 until it was merged with Presidio in 2012. He then took up the chief executive role of Presidio. At the time, the company had been without a chief executive since the departure of Joel Schleicher in 2011.
The way people are consuming, procuring and managing technology now is so much more converged
International expansion has been one focus for the business under his leadership. Cagnazzi is in Ireland to visit the company’s European operation. Based in Dublin, Presidio Europe was set up almost three years ago, when the New York-headquartered business bought Irish IT consulting and managed-services company Arkphire, which employed more than 240 people, for $142 million (€131 million).
The deal was done without Cagnazzi or his representatives setting foot in Arkphire’s Dublin headquarters. “This was the only acquisition we’ve ever done where we didn’t visit the business,” says Cagnazzi. The takeover closed in the latter half of 2020, when Ireland was under level five Covid restrictions. That meant travel between the US and Ireland was difficult.
Instead executives from both businesses met in Bermuda to hammer out terms. It would be some time before Cagnazzi would visit the Sandyford offices of Arkphire.
The Irish arm of the business was expected to act as a strategically significant hub and platform to drive business expansion across both Europe and Asia Pacific for Presidio.
“It’s been a great acquisition. It’s a terrific business, and it’s given us the opportunity to start planting a flag over here in Ireland which is obviously a rich tech economy,” says Cagnazzi. “A lot of their customers were not only our customers but also our partners as well.”
It also gave Presidio access to the wider EU and Singapore. Fast forward to 2023 and the combined entities that preceded Arkphire have been able to expand the service offerings that Arkphire offered to their client base.
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“The way people are consuming, procuring and managing technology now is so much more converged. So if you’re touching anything, you have to understand the implications from the physical layer all the way through the application layer. And Presidio had that skill set, and was able to help broaden that for Arkphire.”
Arkphire was a strong candidate as an acquisition for Presidio. The company has a set of criteria for its potential targets. “We first and foremost look for really good management teams. They have set the culture in place for the business and culture is important. We will make sure there is cultural alignment. They’ve set the strategy, the technical strategy for the business, we want to make sure that that is going to be relevant to the customer,” says Cagnazzi.
“Then it’s an organisation that’s built to scale, so that we can scale our solutions into that business and then can start rolling out a broader breadth of solution sets to the client base.”
Arkphire satisfied those requirements, Cagnazzi said. And so the deal was done.
“We saw a really strong culture, we saw a great management team. A lot of relevant technology areas, but we also felt that we can supplement them with our technology areas, because they had strong account management, architecture and delivery engineering capabilities. That’s been proven out; the business like I said, has performed wonderfully since we acquired it.”
There has only been one big change to the team that transitioned from Arkphire to Presidio, its chief executive. But that was something the company was aware of when it was buying Arkhire. Paschal Naylor planned to stay on to see the deal through but ultimately wanted to retire.
Presidio has now appointed Brid Graham as managing director to lead the Irish business, a succession plan that Naylor had put in motion. She was previously managing director of the product procurement division, and was seen as the ideal choice to take the business forward.
That business, as Cagnazzi said, is thriving. In 2021, Presidio generated $3.1 billion in revenue, with earnings before interest, taxes, depreciation and amortisation of more than $350 million. Part of that was the Covid bump, with businesses rushing to digitise as their staff were forced to work from home.
Cagnazzi witnessed it from both sides. A New Yorker born in Hell’s Kitchen, these days he lives on the North Fork, across from the Hamptons. During Covid, he said, there was a lot of people upping sticks and moving out to the Hamptons as lockdowns cleared out the more crowded urban areas. And with that move came a shift to digital transformation and hybrid working.
“We saw clients that were further along that transformation when Covid hit. It was so much easier for them to transition and preserve the revenue streams and their ability to do business. Those that weren’t struggled,” he says. His company worked quickly to get clients, such as AIB, up and running in record time, getting them through the worst disruption of the pandemic
We are being careful and are looking very closely at the staff and the roles that we’re adding, to make sure that they’re additive
Presidio may have found a business that works for it, but that doesn’t mean it is standing still. The company has been building strong partnerships over the past few years, including with Amazon Web Services (AWS), which has come to form a key part of the business.
“Our vision was technology, the way technologies converge and we had to have expanded expertise across multiple technology areas. AWS has been a critical part of us helping our customers with their digital transformation strategy and growing our cloud business,” says Cagnazzi. “It’s a nearly $1 billion business for us today between services and Amazon services. Some of the things we’ve been able to do for clients are things that we might not have traditionally done years ago.”
The company is also moving towards a solutions provider rather than purely project provider too.
“Everybody has some digital transformation strategy and you can bring in a consultant whom we would say was ‘born in the cloud’. But what we’ve often found is – it’s the old expression – they’ve got a hammer and everything looks like a nail. And that nail is ‘everything’s going public cloud’. That’s not quite reality and it’s not practical,” he says.
“I think we’re more of an honest broker and our clients have seen that and we’ve been able to help them in a more encompassing way. I think a lot of folks have made mistakes where they bring in somebody who’s just focused on public cloud for everything. And then they end up having a lot of issues with some legacy applications that aren’t going to operate well or become way too expensive to operate.”
Presidio is owned by private equity group BC Partners, which took the company private in 2019 in a deal worth $2.1 billion. There was talk of exploring a sale last year, which would have valued the company at a reported $4 billion but nothing concrete has emerged so far.
The decision to take the company private has benefited Presidio, giving it the breathing room to make the acquisitions it needed and to move revenue to the software side of the business without the scrutiny of a market that may not have picked up the nuances of the transformation and what it would mean for the future.
“We were able to do a bunch of great deals since we’ve been private, obviously Arkphire being one of them,” Cagnazzi explains. “On paper they’re not accretive, but they’ve been wildly accretive practically speaking because we’ve been able to expand those services and those revenue streams so dramatically. Being a private company has been helpful in that regard. I mean, we have $6 billion in gross revenue today.
Should BC pursue a sale, there are options though.
“We are owned by private equity firms. At some point in time, they’re going to want to monetise the investment. The likely outcomes are we move to another private equity firm, or we go public. We’re prepared to do either one of those at any point in time,” says Cagnazzi.
“I think we’ve built an incredibly resilient and solid business, the way we’ve performed through Covid and then through the slow own over the last six months. You’ve seen a lot of technology companies let people go; we’ve continued to grow.”
That includes in Ireland, where the company now employs around 300 staff. The company has managed to avoid the large-scale lay-offs that have hit companies such as Meta and Google, and is still hiring for key roles. But it is being cautious, he said.
“We are being careful and are looking very closely at the staff and the roles that we’re adding, to make sure that they’re additive. There might be some that we don’t rehire for. We want to be judicious,” he said.
That caution appears to be paying off. Its most recent results showed solid growth across the first half of its financial year, with growth in both quarters. The last quarter is expected to be the same.
“If you look at it in context, it’s still a year that’s probably 20 to 25 per cent higher than what our typical year would have been two years ago. Really strong and robust bookings and a backlog that is probably six times larger than it would have been pre-pandemic for the size of business that we are. It’s still moving in a really solid direction.”
But that doesn’t mean the economic uncertainty isn’t biting. Clients are unsettled, Cagnazzi says, which translates into longer sales cycles and more scrutiny from the CFO. Deals being sliced up a little bit more into phases.
“I think the difference now – and I think Covid proved that thesis or helped reinforce it – is there’s going to be continued investment in it because of the benefits you’re going to be able to get, especially in terms of efficiency, and productivity.”
When he is not behind a desk or on a plane, Cagnazzi spends his time with family, or on cars. Cars have always been important to him. He paid his way through college by ploughing snow in a 1968 Chevy short-bed 4x4. “That’s how I made my money,” he says.
His older brother Victor, who was a partner in ISG before it was sold to Dimension Data, turned a lifelong interest in cars into a business, Cagnazzi Racing, which now builds engines for other drag racing teams. It was also involved in Chevy’s Project X, putting an electric engine in the car.
“We always had cars in the driveway. We were building cars to race at the local drag race track. When we sold our business to Dimension Data in 2000, I stayed to run the Americas for them. Our older brother retired and he started a drag racing team,” says Cagnazzi.
These days, Victor is working for Presidio in sales, and races as an amateur. Younger brother Christopher spent some time racing for Ferrari, and now competes in the pro amateur league. Cagnazzi, however, prefers another avenue.
“I probably race too much on the local highways. But, for me, it’s buying and restoring muscle cars from those eras. I’ve got a bunch of old Chevys, like a 55 Chevy, a 57 Chevy, a 60 Corvette, a 67 GTO and a couple of old trucks too.”
That includes the 1968 flatbed that paid his way through college. Cagnazzi sold the original years ago because he had no need for a truck while living in the city. But he always wanted to own it again, returning to his business roots in a way.
That willingness to get his hands dirty, to build, is part of the reason why Presidio has been so successful – and why the future prospects for the Irish business are looking good.
“We expect that there will be acquisitions and organic investments to continue to build out this platform. It’s incredibly important to have that base and that management team that we feel can help grow this,” says Cagnazzi. “We’ve got to be making investments in order to do that, and Arkphire is a critical part of that.”
