Gallant expected to combine DynTek and rSolutions into IT services platform

Gallant Capital, an emerging manager raising its second fund, combined two IT services companies into a single platform that it intends to grow in the “fertile environment for add-ons,” sources told Buyouts.

In the tighter M&A markets burdened by more expensive debt, GPs are having to find creative ways to build platforms with an eye toward cost. Common wisdom is that those firms that can improve operations, rather than simply rely on rising markets and cheap debt, will have an advantage through the uncertainty.

Gallant appears to be leaning on its operations focus in the transaction. The deal, which the firm is expected to announce soon, is the first out of Gallant’s Fund II, which has been in market since last year targeting $600 million, sources said. The price tag on the deal was in the range of $150 million to $175 million, the sources said.

The two companies are IT services and products provider DynTek, based in California, and Canadian business rSolutions, which provides cybersecurity services for businesses and governments. Gallant was able to win both companies through investment bank-run auctions, sources said.

Management teams of both companies, as well as the sellers, are rolling equity into the deal, one of the sources said.

Gallant, which brings to bear a group of operators as well as an operations framework into its deals, is appointing one of its advisers, Paul Kerr, to lead the combined organization, sources said.

Kerr founded and led tech services company Scalar, which he sold to CDW in 2019, according to his biography on Gallant’s website. Kerr will work with both management teams to integrate the two organizations, sources said.

Gallant was formed in December 2017 by Jon Gimbel and Anthony Guagliano, who are the principal owners of the management company, according to the firm’s Form ADV. Gimbel and Guagliano both formerly worked at Gores Group.

The firm closed its debut fund on $378 million in 2020. As of December 31, Gallant managed about $946 million, the Form ADV said.

Gallant focuses on complex situations in the North American lower-mid-market across technology, industrials and business services. It makes control investments of up to $75 million in “fundamentally sound companies” where it can deploy its operations talent to drive value.