Sole Source Capital Bets Big on Cybersecurity Consolidation with Brite Acquisition

The cybersecurity managed services sector just gained another major consolidator. Sole Source Capital, a Dallas-based private equity firm specializing in industrial and business services roll-ups, has acquired Brite, a Victor, New York-based cybersecurity and IT managed services provider, marking the firm's inaugural platform investment from its third fund.

The transaction, announced Monday, represents a calculated entry into one of the technology sector's most attractive consolidation opportunities—a highly fragmented market experiencing 18% annual growth through 2026 driven by escalating cyber threats, accelerating digital transformation, and the proliferation of artificial intelligence across enterprise environments.

For Sole Source Capital, the deal follows a proven playbook. Since its 2016 founding by David Fredston, the firm has built a reputation for identifying fragmented markets shaped by secular tailwinds and systematically assembling market leaders through aggressive buy-and-build strategies. The Brite acquisition signals the firm's confidence that cybersecurity managed services—a sector projected to expand from $25.4 billion in 2025 to $45.8 billion by 2032—offers the structural characteristics that have driven success across its portfolio.

Sole Source Capital's track record speaks to its operational discipline. The firm's most aggressive platform, Peak Technologies, has completed 18 add-on acquisitions since 2021 in the automatic identification and data capture market, transforming a regional player into a national system integrator. Similarly, I.D. Images doubled in size within five months of acquisition through three strategic bolt-ons, expanding into Canadian markets and demonstrating the firm's ability to rapidly scale platforms.

"Consistent with our track record of partnering with management teams to build market-leading buy-and-build platforms, we believe Brite represents a compelling opportunity as we enter the cybersecurity and managed services sector," said David Fredston, Sole Source's founder and CEO. The firm targets fragmented, high-growth markets shaped by secular trends and partners with founder-led businesses to build scaled consolidators.

The selection of Brite as Fund III's anchor investment underscores the strategic importance Sole Source places on the cybersecurity MSP vertical. Rather than deploying capital across multiple smaller platforms simultaneously, the firm has chosen to concentrate resources on a single, well-positioned asset with clear expansion potential.

The managed services provider sector has emerged as a private equity favorite, and for good reason. The business model offers several characteristics that align perfectly with PE value creation strategies: predictable recurring revenue streams, high customer retention rates, operational leverage through technology platforms, and significant consolidation opportunities in a fragmented market.

PE firms have been driving M&A activity to create larger, more scalable platforms across the MSP landscape, recognizing that scale advantages in technology infrastructure, talent acquisition, and vendor relationships create meaningful competitive moats. The cybersecurity subspecialty adds another layer of attractiveness—mission-critical services that clients are reluctant to switch, premium pricing power, and regulatory tailwinds that continuously expand the addressable market.

"We are attracted to the cybersecurity and managed service verticals, which possess strong secular tailwinds driven by the increasingly complex cyber threat environment, increased outsourcing, evolving digital transformation, and the growth of artificial intelligence," said Scott Sussman, Sole Source's chief investment officer. The firm sees significant opportunity to grow in this highly fragmented market.

The market dynamics support this thesis. The broader managed services market crossed $380.33 billion in 2025 and is projected to register a CAGR of over 12.8% between 2026 and 2035, while cybersecurity services represent the fastest-growing segment within that universe. Organizations across finance, healthcare, insurance, and education—Brite's core verticals—face mounting pressure to outsource security functions as threat sophistication outpaces internal capabilities.

Founded in 1983, Brite brings more than four decades of operational history and a diversified customer base spanning highly regulated industries. The company delivers cybersecurity, IT managed services, and technology solutions to clients in finance, healthcare, insurance, and education—sectors characterized by stringent compliance requirements and low tolerance for security failures.

This customer composition offers strategic advantages. Organizations in regulated industries typically maintain longer vendor relationships, exhibit higher switching costs, and demonstrate greater willingness to pay premium pricing for mission-critical security services. Brite's positioning in these verticals provides consistent, recurring revenue and a resilient business model.

The company's geographic footprint—headquartered in upstate New York with satellite branches nationwide—provides both regional density and national reach. This hybrid model allows for local relationship management while supporting clients with multi-location operations, a common requirement among mid-market and enterprise customers.

Leadership continuity will support the transition. CEO Justin Smith and President Trevor Smith, along with the existing management team, will remain in their roles post-acquisition. This approach aligns with Sole Source's partnership-oriented philosophy and preserves institutional knowledge critical for customer retention during ownership transitions.

"For the past 26 years, Brite has been focused on providing best-in-class IT solutions, including managed services and cybersecurity, to a diverse set of clientele across the United States," said Justin Smith. "We look forward to working closely with SSC to rapidly scale the business and provide even greater value to our precious customers."

While deal terms were not disclosed, the strategic rationale points toward an aggressive consolidation timeline. Sole Source's historical pattern suggests Brite will serve as an acquisition platform, systematically adding complementary MSPs to expand geographic coverage, deepen technical capabilities, and capture operational synergies.

The cybersecurity MSP landscape remains highly fragmented, with thousands of regional and local providers serving specific markets or industry verticals. This fragmentation creates abundant acquisition targets—smaller firms with strong customer relationships but limited resources to invest in emerging technologies, security certifications, or sales infrastructure.

Scale advantages in the MSP sector are substantial. Larger platforms can negotiate better vendor pricing, spread fixed costs across broader revenue bases, invest in proprietary tools and automation, and attract specialized talent that smaller competitors cannot afford. These dynamics create a virtuous cycle where each acquisition enhances the platform's competitive position and makes subsequent integrations more valuable.

Sole Source's experience executing this playbook across multiple portfolio companies provides operational advantages. The firm has developed standardized processes for target identification, due diligence, integration planning, and post-acquisition value creation. Applying these capabilities to Brite should accelerate the consolidation timeline relative to first-time platform builders.

The timing of this investment reflects broader trends in private equity's approach to technology services. As software valuations have compressed and competition for pure-play SaaS assets has intensified, PE firms have increasingly focused on technology-enabled services businesses that offer software-like economics without software-level valuation multiples.

Cybersecurity MSPs occupy a sweet spot in this framework. They generate recurring revenue through managed services contracts, benefit from secular growth trends, and offer operational leverage through technology platforms—yet typically trade at more reasonable multiples than pure software companies. For growth-oriented PE firms like Sole Source, this valuation arbitrage creates attractive entry points for building scaled platforms.

The competitive landscape for MSP consolidation has intensified, with numerous PE-backed platforms pursuing similar strategies. However, the market's size and fragmentation can accommodate multiple consolidators. Success will depend on execution capabilities—speed of integration, effectiveness of cross-selling, retention of acquired customers, and ability to maintain service quality while scaling rapidly.

Sole Source's sector focus provides potential advantages. Unlike generalist PE firms managing diverse portfolios, Sole Source concentrates on industrial and business services, developing deep sector expertise and operational capabilities that can be leveraged across portfolio companies. This specialization may translate to better target identification, more effective due diligence, and superior post-acquisition value creation.

The Brite acquisition sends signals to multiple stakeholder groups. For MSP owners considering exit options, it demonstrates continued PE appetite for quality assets with strong customer relationships and recurring revenue profiles. For competitors, it signals the arrival of a well-capitalized consolidator with proven buy-and-build capabilities entering their market.

For customers, consolidation trends present both opportunities and considerations. Larger, PE-backed MSPs typically offer broader service portfolios, deeper technical capabilities, and greater financial stability—advantages that can translate to better service delivery. However, customers must also navigate potential changes in pricing, service models, and relationship dynamics as ownership transitions occur.

The transaction also highlights the ongoing evolution of cybersecurity service delivery models. As threats grow more sophisticated and regulatory requirements expand, organizations increasingly recognize that internal security teams—even well-resourced ones—benefit from external expertise and 24/7 monitoring capabilities that specialized MSPs provide. This shift from internal to outsourced security functions represents a structural tailwind that should support market growth regardless of economic cycles.

As Sole Source Capital begins executing its consolidation strategy around Brite, several factors will determine success. Customer retention through ownership transition and subsequent acquisitions will be critical—MSP businesses derive value from long-term relationships, and churn can quickly erode acquisition economics. Integration capabilities will matter enormously, as the firm will need to combine disparate technology stacks, service delivery models, and organizational cultures while maintaining service quality.

The pace of add-on acquisitions will signal the firm's confidence and market receptivity. Based on historical patterns, observers should expect announcement of initial bolt-on transactions within 6-12 months as Sole Source begins building out Brite's geographic footprint and service capabilities. The firm's ability to maintain acquisition velocity while preserving operational performance will determine whether Brite follows the Peak Technologies trajectory or encounters integration challenges that slow momentum.

For the cybersecurity MSP sector, the Brite transaction represents another data point in an ongoing consolidation wave. As PE capital continues flowing into the space and platforms compete for acquisition targets, valuations for quality MSPs will likely remain elevated. Smaller providers must decide whether to remain independent, seek their own PE partnerships, or position themselves as attractive bolt-on candidates for existing platforms.

The broader question is whether the cybersecurity MSP market can support the number of PE-backed consolidators now competing for deals. Market growth projections suggest sufficient expansion to accommodate multiple scaled players, but execution will separate winners from those who overpay for acquisitions or struggle with integration complexity.

For now, Sole Source Capital has placed its bet—and based on the firm's track record, competitors should expect an aggressive consolidation campaign ahead.