Ambitious MSP IT Lab has confirmed rumours that it has gobbled up £12m-revenue Microsoft Sharepoint partner Content and Code.
IT Lab said that the two parties have shaken hands on a deal, creating a £60m-revenue powerhouse with 550 staff and 700 mid-market and enterprise clients - confirming rumours that have been swirling around the channel today.
Backed by private equity firm ECI Partners, London-based IT Lab has grown rapidly in recent years through a string of acquisitions, most notably Manchester-based Microsoft partner JMC in 2015.
Formed in 2001, Microsoft Sharepoint and Office 365 specialist Content and Code made a net profit of £1.8m on revenues of £12m in its year to 31 December 2017.
Content and Code founder Tim Wallis told CRN that the need for his firm to expand into managed services was driven by its clients.
"We found that they wanted someone to digitally transform them, which is where we are really strong, but also someone to run that solution for them - ‘could you just take this whole lot for us and run it for us straight after you've transformed it?' That's where we said ‘we need to invest in this and buy a company or join a company'. And the best company we found in the market by far was IT Lab."
IT Lab's previous acquisitions also include Green Field Technology in 2015, and cybersecurity provider Perspective Risk in 2017.
Based in London and Manchester, IT Lab hit revenues of £34m in its most recently filed accounts on Companies House. Billing itself as "one of the largest managed service providers in the UK", it is a three-star Service Desk Institute-accredited service provider and is also ISO 9001, ISO 27001 and ISO 22301 certified.
IT Lab CEO Peter Sweetbaum confirmed the firm is looking to scale revenues to the region of £100m, partly by making further acquisitions.
"As an organisation that is private equity backed, we are looking to build to a scale and those sorts of numbers you're talking about are the right target," he said. "But more fundamentally we want to have the right capabilities to deliver to our customers well. Frankly the financial performance and scale of the business is secondary to delivering what customers need."
Stuart Fenton, CEO of consultancy QuantIQ - which competes with Content and Code in the Microsoft Dynamics space - said he expected to see IT Lab make another two or three acquisitions and become a "major player in IT services".
"I think we will see a bit more consolidation in the Dynamics space from now on. Much like the LSP [licensing solution provider] space in 2005-2010, market share is important, so scale is critical," he said.
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