Horizon slams 'uneconomic' acquisition prices

Acquisitive IT group says it is refusing to pay the 'uneconomic profit multiples' demanded by potential targets

The contention that channel firms looking to sell up are asking for too much money has been supported by Horizon Technology Solutions in its interim statement.

Despite its stated desire to continue making acquisitions, the IT group, which snapped up distributor EquIP and integrators WBT and EPC in 2006, hasn’t put its hand in its pocket for over a year.

And Horizon has finally decided to vent its frustration as it unveiled an 11 per cent year-on-year rise in turnover to €146.3m for the six months to the end of June.

“Horizon continues to be very active in identifying, analysing and negotiating
potential acquisition opportunities in the services and software sectors in
Ireland and in the enterprise infrastructure sector in the UK,” the firm said in its interim statement.

“While there are many excellent businesses available on the market, even a few that are strategically very interesting to Horizon, the group has declined to pay
uneconomic profit multiples and will continue to seek the right acquisitions at
the right price so as to protect and generate value for Horizon's shareholders.”

Horizon’s misgivings follow aggressive VAR Azzurri’s recent decision to back away from making acquisitions (CRN, June 29).

Azzurri also cited rising earnings multiples, insisting it wouldn’t be suckered into paying “silly prices” for over-valued businesses.

However, with earnings before interest and tax (EBIT) soaring 27 per cent to €4.7m, Horizon was pleased with its performance for the period.

Cathal O'Caoimh, chief financial officer at the firm, stated: “We are pleased to report another period of progress against every financial measure. EBIT is up by 27 per cent and operating margins up 40 bps to 3.2 per cent.

“Very positive cash flow generated €8.8m funds from operations and eliminated net debt at the period end. Horizon is well positioned, both operationally and financially, to deliver continued earnings growth.”