Private equity firm Better Capital has offloaded reseller arm Calyx Managed Services (Calyx MS) for £9m following a competitive auction process.
MXC Capital, the investment vehicle of serial channel entrepreneurs Ian Smith and Tony Lock, saw off "multiple bidders" to land the Brocade, HP and Juniper partner, whose revenues tumbled 18 per cent to £23.8m in its fiscal 2013.
Calyx MS forms one half of Calyx Group, which Better Capital acquired from administration in 2010.
Better is keeping hold of the other half, m-hance, a software reseller formed in 2011 through the merger of Calxy Software and six other firms, but opted to run a competitive auction process for Calyx MS after judging it surplus to requirements.
"In considering the position of the Calyx Group and the likely opportunities for value creation from the two constituent parts, a decision was made to retain m-hance and pursue a sale of the CMS business," Better Capital said.
"CMS was considered sub-scale to other operators in the sector and it was not felt appropriate to apply further capital in seeking acquisitions to increase its critical mass. As a result a decision was made to pursue a disposal of CMS, and in conjunction to plan a restructure of the business should any offers received not meet expectations."
Both Calyx MS and m-hance have endured bumpy progress under Better Capital and just over a year ago the VC was forced to write down the carrying value of the two Calyx Group companies by £13.8m to reflect their weaker performance.
The original plan for Calyx MS was to abandon product resale in favour of managed services. However, in 2012 the management at Calyx MS re-ignited its reseller business after conceding that services deals were tough to win without a hardware door opener.
MXC Capital is acquiring Calyx MS for an enterprise value of £9m in a deal that - subtracting management incentives and sales costs - will boost Better Capital's coffers by £7.8m.
Analyst Megabuyte said the acquisition would provide Smith and Weaver with a similar challenge to when MXC acquired Redstone back in 2010.
"Perhaps the only surprising aspect to this deal is that MXC acquired the business in its own right, rather than through one of its portfolio businesses," it said.
"Nevertheless, given that a lack of scale was one of Calyx's key issues, it seems likely that MXC will not be the sole owner for too long."
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