Contact centre VAR Connect Managed Services says it has gained "first-mover advantage" in the Amazon Connect market by acquiring next-gen outfit CoolHarbour.
CoolHarbour is one of two acquisitions LDC-backed Connect announced this morning, alongside its maiden US purchase in the shape of the assets and technical teams of UVN.
The double swoop will add about $2m (£1.4m) to Connect's revenues.
Connect was ranked 188 in this year's Next 100 report, which featured a Q&A with its CEO Alex Tupman (p11), who took the helm of the firm in 2014 through a management buyout (the full Q&A is shown at the bottom of this article).
Connect billed CoolHarbour as a pioneer in Amazon Connect, which it claimed is disrupting the contact centre market. Through its Lex Service, Amazon Connect allows callers to engage with businesses using 'natural language understanding', it explained. Its flexible, consumption-based model also enables organisations to very quickly build contact centres and then scale up, Connect said, adding that the technology is "highly complementary" to its existing vendors Genesys, Cisco and Avaya.
Tupman (pictured) said: "There is growing interest in Amazon Connect and we are already seeing a shift to AWS within our own client community, with a number moving some or all of their IT applications to this environment. With innovation at the core of everything we do, the timing of the CoolHarbour deal is perfect, as we are currently helping some of our clients to deploy Avaya, Cisco and Genesys implementations onto AWS.
"The Lex Natural Language Understanding capabilities of the CoolHarbour team adds even greater value to our Avaya, Cisco and Genesys users, enabling them to better serve their own customers' needs."
Q&A with Alex Tupman
You announced ambitious growth plans for Connect Managed Services when you took the helm in a management buyout in 2014. What progress have you made since then?
Initially, we needed to stabilise the business and make some investments. Without creating a proper stable platform it's quite difficult to grow, whether that's organically or inorganically. We started our first phase of significant growth in 2016. We did about 40 per cent growth organically, and this year will grow probably about 30 per cent - and obviously we've made the recent acquisition of PC-1.
We are very focused on contact centre and UC, so it's a challenge to find businesses that are like us in terms of acquisitions. Our latest accounts are way out of date - we are now on a run rate of £26m revenues and £3.5m EBITDA.
What is your exit strategy?
We need to get to a scale that makes us interesting to a potential acquirers. When we get to that point we could decide to do a secondary buyout, to IPO the business, or indeed we could sell to a trade buyer. We're not there yet but in a few more years I'm sure we will be.
You've been involved in more than one buy-and-build. What advice do you have for other entrepreneurs looking to scale up through M&A?
It's essential that if you have a buy-and-build plan that you also keep a focus on organic growth, otherwise you can get side-tracked into thinking you've got a great growing businesses, when in actual fact all that's happening is you are bolting things on. One and one has to equal at least three. You have to get the synergies, but also the rationale has to be right such that you can then grow organically through cross-selling and upselling into the customers you acquired, and vice versa.
Also, make sure you do due diligence. Your advisers will do the financial and legal due diligence, but it's down to you to make sure it makes sense commercially and has all the things you think it has.
Connect is backed by Lloyds Development Capital. What are the advantages and disadvantages of working with a private equity backer?
You have the cheque book and you've got some expertise there as well - those are the key advantages. I've heard some horror stories of some PE houses that sit on your shoulder the whole time and don't let you get on and run the business, but our experience of working with LDC has been very, very good.
What has been your biggest mistake in business so far?
My biggest mistake - and something I would advise people to avoid - is, as a CEO, trusting people too much. Don't employ friends and family; make sure you've got a high-quality team around you, but don't get too close. You have to be able to enjoy their company, but make sure they're not someone you're going to invite around to dinner at your house every other night.
Are further acquisitions on the cards?
We've got a key focus on both [organic and acquisitive growth] but in terms of the types of growth areas, the first is technology growth. We are very keen to build a business that is focused on our sector of contact centre and UC - but on the technologies we want to transform to, so in that respect it's Cisco, Avaya and Genesys. When we did the MBI of Connect, it was purely an Avaya heritage business, so we've created the ability to transform now to those technologies through acquisitions, and organically as we've built our own Cisco practice. What we want to add now is more of the same, but also some adjunct capabilities, whether that be voice biometrics, or IVR [interactive voice response], or anything that is distinctive in the contact centre space. That's one area. The other is geographic growth - so we are looking at acquisitions particularly in the US. We are a global business but most of our selling is done in the UK, so we want to be selling in the US to US companies.
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