Fri 6th December 2013
The type of buyer will vary according the size and nature of the company; however they generally fit into one of the four categories below:
1) Trade / Strategic buyers
2) Private equity with management buy-in
3) High net worth investors with industry experience
4) Entrepreneurs with spare cash of £200k to £1m
In the case of IT support and telecoms businesses with revenues from £500k to £4m, buyers are most likely to be trade or strategic buyers.
Trade or strategic buyers are existing companies in similar or aligned industries looking to expand and/or diversify. Due to the convergence of computing and telecoms technologies, we are seeing more and more mergers and acquisitions between traditional IT support companies and telecoms businesses.
Whilst your direct competitors may be interested in acquiring your client base, they do not tend to offer the highest value. The best trade buyers are those who have a strategic objective, for example to extend the coverage of their service into another geographic region, or to add a complimentary service to their existing business (e.g. adding telecoms to IT support or visa-versa) and open up the opportunity to cross sell to the merged client base.
For larger ICT businesses with revenues over £5m and net profit over £1m, private equity firms start to be interested.There is a growing number of small private equity firms looking at acquiring IT support and telecoms businesses especially because there is a high proportion of recurring revenue from clients tied into support / supply contracts.
As always, private equity buyers look at the growth potential and obviously the return on their investment and often have a pool of management buy-in (MBI) candidates with the relevant industry knowledge to take charge of the business post acquisition. Typically they will be looking to acquire several IT support and telecoms companies in order to build a large group company where the valuation multiples are somewhat higher.
Would you consider selling your IT support / telecoms business and becoming part of a larger group?
We would be delighted to offer you a free appraisal of your business to give you guidance on its value and attractiveness to buyers, and whether now is the right time for you to sell. Our appraisal can take the form of either a face-to-face meeting or a telephone call, as you prefer.
Please contact us on 020 8090 9380, email [email protected], or complete the form below to arrange an appropriate time to review your exit strategy and the value of your business in confidence and without obligation.