The channel was well represented in a list of 100 UK private equity-backed UK firms that have grown profits most rapidly over the past two years.
The annual Sunday Times Deloitte Buyout Track 100 is compiled by research firm Fast Track. It features 100 companies with profits under £50m and a minimum of 20 per cent private equity backing.
It ranks firms by average profit growth over the past two fiscal years.
VARs Esteem and 2e2 placed 52nd and 55th respectively after average annual profit growth of more than 45 per cent. Esteem is 61 per cent-owned by Primary Capital, which backed its 2004 management buyout (MBO), while Duke Street Capital has a 69 per cent stake in 2e2.
Nick Grossman, business development director at 2e2, told CRN his company’s efforts to keep its attrition rate as low as one per cent had been vital to growing profitability. “We work hard to keep our key performers,” he said. “These are the people who capture customers’ imaginations and our business pivots on them.”
Alastair Kitching, chief operating officer of Esteem, claimed maintaining the firm’s ethos since the Primary Capital deal had been vital.
“Four years on from the MBO and our flexible and agile approach to business and the provision of IT continues to serve us well,” he said.
Grossman claimed featuring on a list that centred on bottom-, rather than top-line growth, had been particularly gratifying. “There are many private equity-backed IT services companies, so being second among those was fantastic for us,” he said.
System builder Stone Group was 21st with profits growing 68 per cent per year to £3.66m. Software and services integrator Civica placed 72nd after swelling profits by an annual 38 per cent to £21m, on turnover of £127m.
Other featured firms include software player Iris Software, wireless communications outfit Axell Wireless, medical software firm Clinical Solutions and point of sale systems specialist Digipos Store Solutions.
Average profit growth for the companies featured was 53 per cent and the report claimed private equity houses are redoubling their efforts to make their investments profitable in the current climate.
In the report, Mark Pacitti, corporate finance partner at Deloitte, said: “Many private equity firms have stopped searching for deals and thrown their efforts into improving the performance and value of the companies they already own.”
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