Exclusive Networks will use a €50m (£32m)-plus private equity injection to bankroll at least six more acquisitions over the next two years.
The pan-European security VAD has set itself a 2017 revenue goal of €1bn after securing a fresh round of funding led by existing private equity backer Omnes Capital.
The plan is to use the lolly to make at least three acquisitions in both 2013 and 2014, piling on €200m to its current €300m top line in the process. The remaining €500m shortfall will be fuelled by organic growth.
Exclusive Networks operates in 14 western European countries following an acquisition spree that has taken in the likes of VADition in the UK and TLK in Germany.
Talking to CRN, Exclusive Networks chief executive Olivier Breittmayer (pictured) said Exclusive will now play consolidator in markets including eastern Europe, the Middle East, South Africa and Turkey.
"We are already speaking with some companies," he claimed.
More UK acquisitions are also a possibility as Exclusive looks to bulk out its existing operations in adjacent sectors such as storage, mobility and unified communications, he said, while the distributor will also look to pack on muscle where it lacks scale, such as in Italy.
The investment, which will be for between €50m and €60m, has been agreed in principle and will be available to spend in the next few months. The distributor has taken on a corporate development director to steer its M&A strategy.
"Everything will be finalised before June and will probably be synchronised with the first acquisition," Breittmayer said.
Last year, the distributor saw turnover grow by 53 per cent to €279m thanks in part to the contribution of VADition and German acquisition TLK.
Organic growth stood at 30 per cent last year and Breittmayer said Exclusive is shooting for a compound annual growth rate (CAGR) of 15 to 20 per cent between 2013 and 2017 to ensure the €1bn target is reached.
He stressed that the IT security market is currently growing at 7.6 per cent, according to Canalys, with the network security sector – where Exclusive's two largest vendors Fortinet and Palo Alto play – swelling at 8.4 per cent.
Omnes Capital acquired Exclusive in 2010 via a leveraged buyout, a model that is currently attracting scrutiny in the UK IT sector in the wake of private equity-backed 2e2's collapse.
But Breittmayer said that the Paris-based firm had been "very cautious" about the structure of the deal and taking on too much debt.
"If you have a leverage of five, six or seven times your EBITDA, you are in trouble. We were very reasonable in terms of the leverage, which means we have never been under pressure," he explained. "We are delivering much faster than the plan so we started with the level of three times EBITDA and finished with less than one times EBITDA. It was important for us not to be nervous at the end of each quarter and we will continue like that."
Breittmayer said he is happy to go against the grain of European VADs selling up, as Magirus and SDG did last year.
"You have some good local distributors in one or two countries but no one with the same reach and positioning," he said. "This makes our life much easier – when a new vendor arrives in Europe, it knocks on our door every time. Instead of them having to look for 15 to 20 distributors across Europe, with us they can have the same level of services in all the countries."
Room for growth in UK
Exclusive Networks' UK business grew by 24 per cent to €94m last year, Breittmayer said, equal to about nine per cent of the local IT security appliance market.
If the UK were relatively as large as France, which boasts 11.7 per cent market share, it would be €121.9m, Breittmayer added, suggesting he thinks there is more room for growth here.
Exclusive's business model is based on giving autonomy to local managers and Breittmayer stressed UK bosses Neil Ledger and Ian Morris are fully committed.
"They are significant shareholders in the UK organisation so I think they are very motivated to continue," he said. "When we acquired VADition 18 months ago, they were maybe afraid of being managed by a French company. I don't think they are any more, as they are autonomous, continue to run their business, are growing very fast and are now much more comfortable working with us."
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