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Adaptation, reorganization - keys to Solunet's successful recovery
Survival through an industry downturn left Solunet leaner and more focused

By Anne Straub
Brevard Technical Journal

Solunet's management team from left to right: Phil O'Reilly, President; Kathy DeMan, HR/IT; Rick Louizos, Tech. Manager; Norm Metzel, VP/Tres. and Maggie Petro, Manager of Services and Contracts. Photo by Delinda Karnehm, © 2003.

No one can accuse Philip O'Reilly of shying away from a challenge.

His hobbies take him from one extreme to another: He's either scuba diving on the ocean floor, or suspended in air piloting a glider.

Professionally, he's in some ways the guy to call when all else fails.

O'Reilly, 48, has spent the past 20 years working in mergers and acquisitions, acquiring companies, helping them refocus, and then integrating them into larger enterprises or cutting them loose. Some were in serious need of a turnaround; not all of them made it.

His latest challenge started last month, when he took over as chief executive officer of Solunet in Palm Bay, a value-added reseller of hardware and support services to data communications companies. But this time, he's joining the show after the worst act is over.

"We've walked through the valley of death," O'Reilly said of the company, previously a high flier that got hit hard by the downturn in the telecommunications industry. "The interesting thing about Solunet is that it actually survived something that would have killed a lot of companies."

The company's major backer agrees. Sun Capital Partners, a Boca Raton-based private investment firm, bought majority ownership of Solunet in March 2002, citing the company's ability to grow during a downturn in the Internet industry. Last summer, Sun Capital tapped O'Reilly to head the firm.

"The hard part is behind us," said David Kreilein, Sun Capital vice president. O'Reilly's name came up through another company Sun Capital works with. "He understands the industry," Kreilein said.

Phil O'Reilly, President of Solunet in Palm Bay, has spent the past 20 years working in mergers and acquisitions, acquiring companies, helping them refocus, and then integrating them into larger enterprises or cutting them loose. Photo by Delinda Karnehm, © 2003.

Solunet was founded in 1992 and set a blistering pace for growth until the technology slump squeezed the market. Many other mid-sized network solutions providers failed.

O'Reilly compares Solunet's survival to the experience of early settlers heading west. They started out with all their worldly possessions in the wagon, but soon found the load too heavy. The trail to California became littered with the excess that the pioneers cast off. When they arrived, they had only what they needed to survive. "That's a perfect analogy for us," O'Reilly said.

The company definitely is leaner. Employment hovers around 40 people, down from a payroll that once approached 150. At the company's height, annual revenues hit $280 million; that figure is now at $25 million. Revenues nearing $300 million are a thing of the past, O'Reilly said.

"Solunet at $60 million to $100 million is a fabulously successful story about adapting to your place in the food chain," O'Reilly said. By the end of next year, he expects the company to be one of the top three players in its market.

"There's a lot of fruit lying on the ground from the decimation of this market space," he said.

Solunet survived because of its talented, dedicated staff, O'Reilly said. He rates the company's remaining problems at two or three on a scale of 10. Most of what he calls problems are organizational issues related to adapting to the company's smaller size, as well as the need to take advantage of what the company's vendors can do for Solunet.

That's an area he's accustomed to tackling. His most recent tenure was at a voice-over-Internet company called DataVon. The Texas company was struggling and O'Reilly "jumped in the middle and really took charge of the financial aspects," said Mike Donohoe, general consul for Transcom Holdings.

O'Reilly excels at managing customer and vendor relationships and negotiated favorable deals for equipment finance for DataVon. "Phil is an extremely bright man who has a very broad experience," Donohoe said. In the end, the company's capital issues and lawsuits proved too much. The company filed for Chapter 11 bankruptcy protection after O'Reilly left and its assets were purchased by Transcom.

O'Reilly joins Solunet after a brief attempt at retirement. His first orders of business:

* Focus on vendor relationships. The company is reestablishing and upgrading certification levels with most of the companies it does business with, as well as adding manufacturers to the roster of products it sells. * Reorganize sales force: All regions now have sales engineers on staff, in addition to backup in Palm Bay. Teams are more cross-functional. * Increase focus on significant technologies. Solunet is adding training and vendors in voice-over-Internet and wireless technologies. * Geographical expansion. The company is adding markets in the Caribbean and Latin America.

Those markets are a natural for O'Reilly, who lived for part of his childhood in Cuba. The son of a Cuban mother and Irish father, he did most of his growing up in Philadelphia. His father worked with a team that developed printed circuit boards, but O'Reilly didn't gravitate toward technology right away. He trained as an attorney, then entered the corporate world.

O'Reilly earned a master's in business administration from Penn State in 1999. He's the father of two grown children.

Despite his history of moving on to new challenges at different companies, O'Reilly says he's ready to stay put at Solunet.

"I think this one is probably going to be my last one," he said.