July 2011
Redmond Channel Partner

Microsoft will often refer to its  partners as if they belong in one of two camps: lifestyle partners or  growth partners.

The prototypical lifestyle partner is  the IT pro who has built a comfortable business for himself with perhaps an  employee or two and is earning a decent living working as many or as few hours  as he'd like to fit around his family life. The growth partner, on the other  hand, is focused on increasing revenues, improving profits, adding staff,  expanding markets and gaining share with the constant goal of becoming a larger  company. The definitions are fluid. A stalled growth company can become an  unintentional lifestyle company. Some lifestyle companies grow very fast.

Occasionally, a lifestyle partner  will have an "aha" moment and make the conscious decision to  transform into a growth partner.

For Jamison West that moment happened  in 2006 at an SMB Nation conference. West had started his Seattle-based IT  practice in 1995. "It was kind of a one-man band for the better part of 10  years. I was just going around doing break-fix work," West said.

To cope with extra work in 2005, West  hired an administrator and another tech. But at SMB Nation, he met Arlin  Sorensen, founder of the Heartland Technology Group, which specializes in  peer-to-peer business planning for small IT services companies.

"I did a 180 in my head around  reactive time and materials versus managed services," West said. "At  that time, I had a conversation with my family about lifestyle or grow the  business."

With his family's support secured,  West incorporated Jamison West Consulting Services (JWCS) on Jan. 1, 2007 and converted  nearly all of his clients to managed services contracts. By June 2010, he had  about 10 employees and started talking to Cogent Growth Partners, an  Atlanta-based M&A advisory firm focused exclusively on the IT and managed  services space. "For two days in a row, I talked to them," West said  of Cogent, which charges a monthly retainer and earns a success fee when a deal  closes.

A day later, he was talking to his  colleague Brad Benner, founder and principal of X-BAR, a local 5-person company  that had built his business models and pricing almost identically to West's. "I  went back and told Brad [about the conversations with Cogent], and he said, 'Well,  I'm first,'" West said.

That deal closed on July 1, 2010.  Through organic growth, the combined company had increased to 20 people by the  end of the year. On March 1, West closed another deal to acquire Titanium Ant  Inc., a 15-year-old enterprise consulting services firm in the Seattle area with nine employees.

"Now we've got roughly 29, 30  folks," West said. "We've tripled in a year."

The company is now structured in  three departments. The managed services department consists primarily of JWCS  and X-Bar staff, and the professional services department is mostly Titanium Ant  staff. A third account management department, built from the JWCS core, is  focused on Virtual CIO services. "Often, even in an 80- to 90-person company,  they don't have a CIO," West said of the opportunity.

Combining three companies provides a  deep bench of Microsoft expertise. JWCS was a Gold Certified Partner and Small  Business Specialist. Titanium Ant brought membership in the U.S. VAR Champions  Club and the Cloud Champions Club. The pooled resources equate to silver  competencies in Desktop, Identity and Security, Midmarket Solution Provider,  Server Platform and Volume Licensing.

And the company has done it without  taking on massive debt. "We didn't pull credit for either acquisition,"  West said. "With Cogent Growth Partners, it can include any mix of equity,  down payment, guaranteed cash over a period of time or cash based on revenue  over a period of time. We're able to mitigate a lot of the cash issues because  only some of that cash is up front."

Growth also means outgrowing the  name. The JWCS moniker that made sense in the "one-man band" days is  creaking under the weight of the acquisitions. On July 1, in an event at the  Microsoft Store in Bellevue Square,  JWCS launched a new name for the combined company -- Arterian.

The name comes from the Latin root  word for "artery," and the name is designed to be suggestive of building  a path for technology and systems.