Despite recently embarking on an M&A spree itself, managed services provider 365ITMS has agreed to sell up to a larger player.
The private equity-backed firm, which sells direct and also owns channel services outfit 5i, has agreed to be acquired by AIM-listed Coretx for an enterprise value of £5.4m.
A specialist in unified communications, 365ITMS is a training provider for Cisco and also bills itself as a specialist in Microsoft Office 365 and Skype for Business.
Boasting 110 staff, the firm broke even at a pre-tax profit level for the 10 months ending 31 January 2017 on revenues of £12.8m. Some 45 per cent of its revenues were recurring.
Rumours that private equity backer LMS Capital had exited the firm and that a change of ownership for 365ITMS was afoot surfaced yesterday, but when we put this to managing director Steve Ellis yesterday he said he was unable to talk until today.
Coretx itself is an amalgam of two firms acquired by Castle Street Investments at the start of 2016: Selection Services and C4L. It aims to create a £100m cloud and managed services player.
The deal encompasses £1.6m in cash and £3m in new ordinary shares, while Coretx will also assume 365ITMS' cash balances of £0.6m and debt balance of £1.4m with Royal Bank of Scotland.
At one stage, 365ITMS harboured ambitious growth plans itself, promising more acquisitions in the wake of its purchase of Poole-based MSP Deverill last April.
Talking to CRN today, Ellis confirmed he has left 365ITMS as a result of the deal, which he described as "a good deal for both parties".
"If you look at Coretx and what trying to do, and then look at the skills sets that exist inside 365ITMS - in particular our UC and around Microsoft - you can see why it is a good fit," Ellis said.
Ellis confirmed he is already eyeing his next venture.
"I'm looking at doing something in the cyber-security industry," he said.
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