IT Managed Services Provider for Sale

Reference Number: HGM111

Location: London and Overseas Office

Turnover: £1.3m

Status: SOLD

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Business Summary

  • Highly successful provider of fully managed IT support and hosted / cloud services.
  • Based in London with an overseas office and support desk; the company has global clients across the UK, Europe, Africa, Asia and the US.
  • A well-defined brand offering a comprehensive range of IT services, primarily for small and medium sized businesses.
  • Over 120 servers and 700 PCs/MACs supported by the company across its client base.
  • The average size of client serviced by the company is 45-50 users and 6 servers.
  • A loyal client base which is well spread both geographically and across industry sector including companies in design & creative, finance, professional services, IT and construction.
  • A significant proportion of the company’s 40+ customers are on 3-year managed services contracts with auto-renew terms and are predominantly paying monthly in advance.
  • Approximately 65% of turnover is contracted recurring revenue. The rest is hardware/software sales.
  • The largest client represents 39% of the total revenue and has been a customer of the company for over 13 years; no other client represents more than 10%.
  • Over 20% of the clients have been using the company’s services for between 10 and 18 years.
  • Turnover to July ‘16 was £1.33m with an adjusted EBITDA of £434k (33%). Projected turnover for the year to July ‘17 is £1.53m.
  • A second-tier management team is accountable for running the business day to day.
  • The sale of the business offers an outstanding opportunity for another IT support, hosted services, technology or telecoms company looking for a strategic acquisition to add to their portfolio.
  • There would be significant opportunities for any UK-based acquirer to realise significant cost savings by migrating more IT support desk and back office work to the overseas office.

Products and Services

  • Fully-integrated, comprehensive managed IT services
  • Fully bespoke Hosted Cloud Services
  • Consultancy Services
  • Re-Sale of products and services

Employees

  • 2 Directors (vendors) plus a highly capable team of full/part-time staff.
  • The technical side of the business is managed by the Technical Services Manager and Service Delivery Manager.
  • There is a full-time Finance Manager, Procurement Administrator and Marketing Manager

Premises

  • The Head Office in central London is provided by one of the company’s long-term clients – there are no contractual obligations, rent or rates payable.
  • The overseas office is rented on a three-month rolling contract basis, at a rent of £1000/month including utilities & connectivity.

Reason for sale

  • The vendors feel that they have taken the business as far as they can and have established a solid platform for growth. Their expectation is to probably exit the business following an agreed handover to pursue other non-competing interests, but both would be open to remaining with the business for the medium term if this suited the acquirer.

Financial overview

Year ending 31st July201420152016
Sales revenue£576,851£843,521£1,334,567
Gross profit£438,977£579,740£983,765
Percentage76%69%74%
Adjusted EBITDA£191,044£270,552£434,067
Percentage33%32%33%

Adjusted EBITDA is stated having accounted for market remuneration of the vendors’ roles in the business.

SOLD

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