Web Host Industry Review Blog

Liam Eagle

April 10, 2008

Being at the Microsoft Hosting Summit this week gave me a chance to talk to Ravi Agarwal, founder of pivate label Exchange provider groupSPARK, who sold his company last week to managed service provider mindSHIFT.

Agarwal, who along with a less visible partner was founder and owner of the company, is clearly still on-board at groupSPARK. The business was acquired, he said, to add revenue to the mindSHIFT business, and will continue to operate as a separate unit.

Both companies are private, and they're not prepared to share the specifics of the acquisition, in terms of price or other details, but he says he and his partner have agreed to work with the company for an amount of time that can be measured in years.

Agarwal says groupSPARK was profitable, but without any large-scale backing, it was putting its own profits back into the business and was only able to grow as fast as those profits would allow. About a year ago, the company decided to set out in search of a buyer that could provide them with some of the financing they would need to grow at a pace that would keep up with the exploding demand for hosted exchange and related services.

GroupSPARK engaged an investment bank, Noonmark, to find a buyer. The mindSHIFT deal, concluded just last week, was about six months in the making.

Now that growth is taking place at a quicker pace. The company is hiring at a rate of about one person per week, says Agarwal, and is able to build out its infrastructure in advance of demand.

Beyond the obvious synergies related to the companies' shared unusual taste in capitalization, Agarwal says mindSHIFT has some technologies, such as online backup, that groupSPARK is likely to want to provide to its customers. And groupSPARK might have some things mindSHIFT will want to sell.

"Integration is at the bottom of the list right now," though, he says. The mandate at this point really is revenue growth, and not cutting costs.