TSG opens talks for expansion plan

Northern accounting reseller Technology Services Group (TSG) is in talks with several targets in the south of England and the Midlands after kicking off phase two of its expansion strategy.

Backed by £25m in cash from majority shareholder and Sage founder Graham Wylie, TSG bought 21 resellers between 2003 and 2006. Most were situated in the north of England and Scotland.

After an 18-month hiatus, TSG has bought the UK Pegasus arm of Xperience Group, which has offices in Leicester, Wellingborough, Tamworth and London. This boosts its Pegasus customer base to 1,700.

Nigel Hudson, TSG group business development director, said TSG would draw down on its £25m debt facility with HSBC to aid its geographical expansion.

“Having settled down the earlier acquisitions, there are a lot of discussions going on now and we expect to make more announcements in 2008,” he said.

Hudson admitted the accounting market had become tougher, but said there are still opportunities.

“A lot of smaller partners do not have the marketing resources to make customers understand how investing in new systems could help them, they are the ones that are suffering the most,” he said.

Kevin McCallum, commercial director of Pegasus said: “TSG is now easily the largest UK Pegasus reseller, but it has not reached a point where it has a controlling interest. We still have a network of more than 100 partners.”

Mike Kelly, head of mid-market channel sales at Sage, said: “We are seeing some consolidation in the reseller market, and part of this is about our resellers joining to bring together their skills.”