Deal done:
Sale of IT Support Company – Apple MAC Specialists

Turnover:  £1.3m
Deal completed in:      6 months

The company

A successful IT support company specialising in Apple MAC solutions. Established in 2005, the company had a turnover of £1.3m, with net profit of over £200k. Circa 70% of the revenue is generated from contracts for their IT support service and in-house managed services. Whilst a good bolt-on acquisition opportunity for another IT support company, with the increasing crossover between the information technology and telecommunications sectors, we saw this as an ideal opportunity for a telecoms company to bring IT support and telecoms services together under one umbrella.

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The situation

Prior to marketing the company for sale, we had worked alongside the owner for 3 years, starting in 2009, on a consultancy basis helping him create a highly attractive business which would sell well and for the value he set out to achieve.

During our guardianship, the business grew from an annual turnover of less than £500,000, which we valued at c.£200k, to one in excess of £1.2 million. Focus was put on building up the portfolio of support contracts which bring in regular monthly income and which is the “holy grail” for business buyers in most sectors but particularly IT support and telecoms businesses.

In 2012 our client decided to realise the asset that he had built over the previous 7 years. The reason was twofold, 1) in order to achieve financial stability for him and his family and 2) to enable the company to grow to the next level (targeting £5m turnover over the next 3-5 years) with the appropriate management and funding behind it.

What Hornblower did

Through our extensive network of buyers in the IT support and telecoms sector, we were able to line up a number of buyers who put serious offers on the table, which both met our expectation on valuation and set the market price for the business.

The eventual buyer, the owner of a successful telecoms company, was a contact of our clients. Having previously referred business to our client’s company, the buyer clearly saw the full potential of merging the two businesses and cross-selling the two services.

Having established the market value for the business we were able to negotiate the best deal value and structure for our client.

WIN WIN

The buyer acquired 80% of the shares in our client’s company. Our client retained the other 20% and continues to run the company as managing director for the new owner. The deal has enabled him to settle his mortgage as well as retain a significant stake in the company.

With the backing of the new owner and 80% shareholder, and opportunities that working alongside a larger telecoms company brings, the company is well on the road to achieving sales of £5m in the next 3-5 years. If it does, our client is set to realise as much again from his 20% on the eventual exit.

SOLD – August 2013

Hornblower Business Brokers – Specialists in selling IT support and consultancy businesses