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Mixed Feelings as Sada Sells Off Microsoft Unit

Sada Systems Inc.’s sale of its Microsoft Business was not an easy decision, but it was the right one. Sada Chief Executive Tony Safoian said that it was the correct move for the North Hollywood company, the employees in that business unit, the customers they serve and the relationship with Microsoft Corp. “We thought they would flourish under a new parent,” “Safoian said. Sada sold the business in March to Core BTS, a New York-based information technology and managed services provider that is owned by private equity firm Tailwind Capital. The NoHo company worked with 7 Mile Advisors, in Charlotte, N.C., on the sale. Sada Systems had revenue of $100 million in 2017 and employed last year about 230 workers, of which more than half were located in the San Fernando Valley. That number put Sada at No. 2 on the Business Journal’s list of Information Technology Firms ranked by total employees. It ranked No. 9 on the Women-Owned Businesses list ranked by employees. About 20 percent of the company’s revenue came from the Microsoft business unit, which accounted for about one-third of the workforce. For the time being, Core BTS is keeping its new employees on the sixth floor of the office building where Sada is located at 5250 Lankershim Blvd. “There are plans for them to get their own space and form their own identity under Core BTS,” Safoian said. Core Chief Executive Walter Cook said he was excited to welcome the Sada employees to the company. “This acquisition strengthens our strategic partnership with Microsoft and expands our relationships with many tremendous clients,” Cook said in a statement. “Our talented team will continue to offer our clients the industry-leading services and solutions that help them advance their businesses through technology.” Sada and Core hooked up as part of a process started more than a year ago when Sada found itself managing successful Microsoft and Google business units. Sada had been contacted by Google about doing some work related to its apps more than 10 years ago. That connection led Sada to become a partner in selling Google apps and create a tool to allow for transferring e-mail over to Google’s cloud service. Microsoft saw what Sada was doing and contacted it to be a partner when it was launching its Office 365 suite of services in 2011 that included Microsoft’s Office, e-mail and social media functions. “It became challenging to manage a competitive overlap that exists in those two ecosystems,” Safoian said. Safoian said the company had two paths it could have taken. One involved taking on private equity money and maintaining its services as platform neutral in the cloud computing space. The second was to split the company. “At some point the family got together and decided we should go to market in this new way,” Safoian said. “We knew it would be difficult emotionally and business wise because carve-outs can be challenging.” Key to the sale was getting the cooperation and buy-in from the members of the Microsoft team. There was a lot of interest and the finalists were narrowed down to five then to two with Core BTS chosen as the buyer. Having never sold off a piece of Sada’s business before, the process was a learning experience for Safoian. The most fundamental lesson he learned was that he is much more of a business operator than a mergers and acquisitions chief executive, he said. “I understand why M&A is important – and in this case it was super important – but I love operating the business,” Safoian added. “I do not live in that private equity world. I know it’s a great strategy that some people deploy, but I am a big fan of organic growth.”

Mark Madler
Mark Madler
Mark R. Madler covers aviation & aerospace, manufacturing, technology, automotive & transportation, media & entertainment and the Antelope Valley. He joined the company in February 2006. Madler previously worked as a reporter for the Burbank Leader. Before that, he was a reporter for the City News Bureau of Chicago and several daily newspapers in the suburban Chicago area. He has a bachelor’s of science degree in journalism from the University of Illinois, Urbana-Champaign.
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