Esteem rallies with M&A push

VAR indicates further interest in acquisitions to increase annual sales to £100m

Joe Connolly: Esteem is keen to build its networking offering

Esteem Systems is gunning for £100m turnover in the next two years through a mixture of organic and acquisitive growth.

The Microsoft, IBM, Citrix and Oracle VAR last week acquired managed services and support firm SiRViS IT Holdings for an undisclosed sum. The Primary Capital and Lloyds TSB-backed buy was Esteem’s second acquisition this year after it snapped up Oracle service provider Midas IT in May

Speaking to CRN, Joe Connolly, chief executive of Esteem, said: “When I came along, our original plan was for a buy-and-build strategy, but prices were too high at the time so we developed a three-year business plan.

“We planned to focus our acquisition strategy on the South, based on contracted revenue and a strong customer base, and SiRViS fitted that bill. We do not want companies that are overexposed to one customer.”

Connolly added that SiRViS will continue to operate as a separate division under the same management team – a similar strategy to its Midas IT acquisition.
He added that the growth plans are paying dividends.

“We are already around the £50m to £60m mark and over the next two years we want to hit the £80m to £100m turnover figure,” he said. “It may even happen over the next 12 months as we continue to acquire, and that is when we would look to bed the business in.”

He added that Esteem will continue to look at managed services firms, but that it is also keen to build its networking offering.

Kay Bruen, director of channel consultant Clipsham IT, said the market was ripe for acquisitive companies such as Esteem.

“I am advising a couple of firms at the moment on their acquisition strategy,” she said. “Two years ago companies for sale were looking for multiples of between 10 and 12 times EBITDA as an asking price. Now they are looking at between five and six times EBITDA.

“Prices are coming back up, but are nowhere near what they used to be,” she added.

“It is a buyers’ market and there are definitely bargains to be had, particularly with fears over public sector spending cuts.”