Adept Telecom targets large-scale acquisitions
Acquisitive VAR turns its attention to companies with annual turnover of about £10m
Voice reseller Adept Telecom has revealed plans to continue its acquisition strategy by targeting larger-scale buy-outs in the future.
Adept has made 13 acquisitions to date, mainly of smaller resellers’ customer bases. So far in 2006 Adept has acquired the fixed-line customer bases of VARs Fizz Telecom in June, Admiral Managed Networks in March and Transglobal in February. The VAR also floated on the Alternative Investment Market in February.
Roger Wilson, chairman at Adept, told CRN that the firm’s primary suppliers are large network operators such as Cable & Wireless, Verizon and Gamma.
“We have been effectively acquiring firms’ customer bases,” Wilson said. “There are lots of smaller voice resellers in the UK: hundreds, in fact. We see these firms as a consolidation opportunity. Scale is important. Most of the resellers we buy don’t have any scale and have a turnover of less than £2m a year.”
Wilson claimed that last year Adept posted a solid financial performance, which indicates that its consolidation model works.
Adept’s 2005 turnover was £8.6m, a rise from £4.7m in 2004. Its profit also rose from £1.5m in 2004, to £3m in 2005.
“We see no reason not to continue with this acquisitive model,” he said. “It is a successful model. We can also integrate the firms [we acquire] quickly, usually within six weeks.
“We were targeting small and medium-sized voice resellers. We are now targeting bigger deals. Ideally we would like companies with a turnover of about £10m per year.”
Wilson added that Adept has a track record of completing one acquisition per quarter, and is looking to continue with this average.
Keith Humphreys, managing consultant at research firm EuroLAN, said: “I think acquiring customer bases is an expensive way to gain customers, rather than investing to get the skills to build up a customer base.”
Humphreys added that consolidation is still rife in the voice channel, but that this has still not driven up the cost of acquiring a company.