Channel services provider Oriium has made its first acquisition and says it is locked in talks with two further targets.
A year after taking on investment, the Yorkshire-based data management specialist has grabbed a majority stake in London-based application specialist add3 for an undisclosed seven-figure sum.
The move boosts Oriium's revenue run rate to £6m, hands it a southern office and extends its capabilities to include cloud migration, application transformation and application packaging services.
Having started as a direct-selling CommVault services specialist, Oriium recently shifted to a channel-only model. Add3 sells primarily through 15 partners, five of which are giants with revenue of £500m or more.
"We are completely channel only and are buying a firm that derives 90 per cent of revenues from the channel," said Oriium managing director Chris Kiaie. "We intend to slowly introduce its minority direct legacy business into the channel partner base, much as Oriium did."
The channel services market is consolidating rapidly, with Phoenix IT, Networks First, Intact, ITEC and Comms-care all having been acquired recently, the latter three by distributors Westcon, Exclusive Networks and Ingram Micro, respectively.
Kiaie (pictured on the left, with Ryan McCarry, who invested in the firm last year) claimed this trend has been positive for Oriium.
"We believe some of the value of the organisations that have been taken under the wing of large distribution players has been diminished," he said.
"We don't have a vendor set to push into the channel; we are here to advise agnostically."
Oriium's goal is to hit £10m revenue by 2018 via a combination of organic growth and acquisitions, with Kiaie revealing talks are ongoing with two further targets.
"We don't just want to increase our numbers artificially; we want to buy and build through value, and that does make identifying targets more difficult," he said.
"We have to be realistic about it. A lot of firms out there that are delivering value aren't necessarily knocking out multi-million revenues. They are providing something really niche, and potentially their marketplace is direct, or a blend of direct and channel, which is where Oriium came from. We are well placed to indoctrinate a blended player and shift it to a channel model."
Add3 founders Danny Clarke and Andy Hopkins will retain a stake in add3 and will stay on at the firm, Kiaie said as he talked up what the acquisition brings to Oriium.
"With the way the market is going, the focus is shifting to workloads and applications, rather than infrastructure," he said. "These guys are well placed because they understand applications intrinsically. With AWS' dominance, and with Azure picking up market share, we want to be there to assist and enable partners that don't quite have their strategy mapped out for what public cloud means."
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