Sub-£10m security resellers warned they must buy or die
Security integrator Sysec issues stark warning to rivals as it prepares to finalise its own M&A strategy
Security resellers stranded on revenues of £2m to £10m have no future and must decide now whether to acquire or sell up.
That is the view of security integrator Sysec, which will decide itself in September whether to acquire or be acquired after investing in new IT systems and changing its accounting policies.
McAfee partner Sysec has a turnover of £5m, and the integrator recently signed a deal with BT to provide security services to its customers.
Managing director Cris Pikes said the Theale-based firm would seek a buyer if it cannot find the right acquisition targets to break through the £20m turnover barrier within a year.
"In the UK, you have in the region of 150 security resellers that sit in the £2m to £10m bracket," he said. "But the big organisations at the top of the food chain are only interested in making acquisitions of firms with £50m to £100m turnover.
"We have created a platform that is scalable and repeatable and have shifted to a GAAP accounting policy that will enable us to either be acquired or acquire by raising debt."
Corporate finance specialist Rupert Cook, who is on Sysec's board of directors, argued that anyone below £10m revenues has no real future in the channel.
"There are loads of people sitting on £4m to £5m revenue and anyone who stagnates at that level is going to be in trouble," he said. "There is no future in that."
Pikes also hit out at rival integrators who fail to back up rhetoric with action.
"There is no smoke and mirrors with us," he said. "We will be talking to VCs, corporate finance houses and potential acquirers. The only other person I am seeing making waves and moving forward is Ian Smith with Accumuli. He is an interesting guy and has a pedigree."