TechMarket View7 Apr 2017 12:27
Mid-market player, Coretx, has acquired 365IT for an enterprise value of £5.4m. Note that Coretx was known as Castle Street Investments prior to April 2016.
For the 10 months to January 2017, 365IT generated revenue of £12.7m (45% recurring) and EBITDA of £500k. The majority shareholder in 365IT was LMS Capital Plc
Results just released from Coretx show the company (which was founded on the acquisitions of Selection Services and C4L Group at the beginning of its financial year) had total revenues of £43.4m (with around one third coming from managed services). The 365IT acquisition deepens Cortex’s voice and unified communications capabilities, and provides cross-sell opportunities while broadening its geographic coverage.
Mid-market focused 365IT was established in 2011 following the combination of four companies operating in the data back-up, IT infrastructure and unified communications markets. A year ago, it acquired Deverill Group Limited, bringing in IT support, training and other IT services capabilities (e.g. business continuity and Infrastructure-as-a-Service). The combined entity has particular expertise in Cisco and Microsoft solutions.
Our analysis of suppliers in the mid-market continues to show just how different it can be to the corporate space. For example, the tendency to use a core supplier for multiple types of services. While budgets are also under pressure, more organisations are going to external providers for the first time, or taking more serious steps to invest in services that safeguard the firm, such business continuity or security. As a result, the mid-market can be a lucrative part of the market, and given the sheer number of players operating in it, it is also ripe for consolidation plays such as Coretx.
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