Calyx founder Healy back with deal for former Redstone arm
New Maurice Healy vehicle acquires one of two remaining trading arms of Castleton Technology, as former Redstone business plots its own M&A return
The disassembly of the company formerly known as Redstone has continued with the sale of one of its two remaining businesses.
Publicly listed Castleton Technology - the name the business took following the sale of the Redstone brand and operations to Coms in November - announced today that its QAD consultancy business has been sold. The buyer is identified as Glantus Limited, which is to pay £200,000 for the business, a quarter of which will be deferred for six months.
Glantus was incorporated just two weeks ago and is registered to an address in the City of London. Its sole director will be familiar to anyone with more than a passing interest in channel M&A activity: Maurice Healy.
The Irish entrepreneur founded Calyx and oversaw its aggressive buy-and-build strategy in the mid-noughties. His two-decade association with the firm ended in 2010 when it entered administration and was acquired by investment house Better Capital.
According to Irish news outlet RTÉ, shortly after leaving Calyx, Healy consented to two judgement orders for more than €17m (£14.4m) relating to unpaid loans from former Calyx backer Anglo Irish Bank. After several years out of the UK channel limelight, the deal for the Cheltenham-based software consultancy appears to mark a return to the scene.
Castleton indicated that the consultancy, which it acquired through Redstone's 2012 acquisition of Maxima, had "previously had a formal working relationship" with NASDAQ-listed US player QAD. But according to today's statement "QAD withdrew with its support for the business some years ago".
"The QAD software consultancy business is reliant upon the people it employs and its remaining customer relationships, both of which have been negatively impacted in recent months," adds the statement. "The board believes that significant financial and management investment is required to turn the business around. As a result, the board have taken the decision to sell the business in order to allow a new management team to invest the time and resources required to return the business to growth."
In the year to 31 March 2013, the QAD business generated underlying profit of £390,000 on sales of £877,000. Castleton estimates that its profitability will decline in future years, with annual overheads totalling more than £250,000. Glantus has acquired a company with assets worth £7,000 and a small amount of work-in-progress value. Castleton retains debtors and creditors.
Ian Smith, chief executive of Castleton, reiterated his firm's plan to get back on the acquisition trail, with the proceeds from today's sale to be set aside for investment.
"The board continues to actively consider options to maximise the value of the company including potential acquisitions in line with our stated focus on the technology sector," he said. "We believe the consideration received from the disposal reflects a fair return for a people based business that is in decline."
Following the sale of the QAD business, Castleton's sole remaining trading operation is Glaswegian ERP specialist MIG.