Redstone hits M&A trail for smart buildings push

New CEO Mark Braund says Redstone is ready to make targeted acquisitions after claiming its troubles are behind it

Redstone has put acquisitions back on the agenda as it looks to become a leader in the fast-growing smart buildings market, its new chief executive has told CRN.

Mark Braund was this month crowned CEO of Redstone, the sole remaining operating division of Coms, the AIM-listed outfit to which he was also appointed CEO in January.

Braund arrived at Coms as a non-executive director last March after the wheels fell off the AIM-listed firm's ambitious M&A strategy and since then it has unwound some of its investments, including its loss-making voice reseller arm.

According to analyst Zion Research, the market for smart buildings - buildings which are "responsive, flexible and adaptive to the changing needs of their users" - is set to grow at a compound annual growth rate of 30 per cent to reach $36bn (£25.8bn) by 2020.

Braund said Redstone is moving beyond its roots in cabling into that fast-growing sector and said targeted acquisitions would complement its strategy.

"The ability to turn the data into actionable information in order to make buildings smart, rather than just intelligent, is an area we are going to put energy into," he said. "That's important because these are the solutions that justify the need for all the technology in the first place and it's a market that is growing exponentially.

"Yes, we're going to be acquisitive, but I want to make one thing clear: we have a strategy and any acquisition will either accelerate the pace at which we achieve our strategy or will be earnings-enhancing."

One piece of smart building technology Redstone has already developed in-house is OneSpace, an office occupancy management application that has been adopted by media events firm UBM. It is designed to help customers squeeze fewer staff into a smaller area, save on energy costs and increase staff productivity.

"That lit up my interest in the group," Braund said.

"The key thing is, a lot of these applications haven't reached market maturity so there are no dominant players. The likes of Cisco, Huawei and IBM are creating open architectures against which people like us can develop applications that will provide meaningful answers to the business problems [clients] have."

Following the disposal of its albatross telco activities last year and sale of its Media division to management in January, Coms now has 296 staff, with full-year revenues tracking just above £40m. Other than the outstanding task of closing its former head office in Stokenchurch to cut down on surplus office space, all legacy issues have been resolved, Braund claimed.

Braund (pictured) spent 13 years at IBM but has since gained a reputation as a turnaround expert associated with fixing failing firms.

The turnaround at Coms is now "done", Braund said, but he added that the initial task of hauling a firm out of trouble is the easy part of the job.

"The reason I was relevant to take on this role is I have a history of taking broken business - three of which have been through poorly executed buy-and-builds - and turning them into something of significant market value," he said.

"I don't like the word 'turnaround' as that is only part of the job - and the easy part. The more difficult part is taking something that's good and turning it into something that's great."

The Redstone brand split in 2013, with the managed services arm becoming Redcentric and the cabling division, Redstone Converged Solutions, being sold to Coms.

Coms CFO Spencer Dredge, who also joined last summer, said the Redstone brand, which is more than three decades old, has emerged unscathed from Coms' meltdown last year.

"Coming in here, I was aware of the troubles the group had had and was pleasantly surprised that Redstone wasn't damaged by the troubles," he said. "There was an argument about whether Redstone fitted with the Coms group [in 2013] but that lack of understanding meant it remained untouched and the management team here were left to run it and grow it - and did a pretty good job."

Braund agreed: "The customer satisfaction at Redstone has been the highest of any employer I've worked with and that is a great foundation on which we can now build.

"We have customers in the banking sector that give us terrific referenceability and terrific scope to expand far beyond what we are doing today. We are not here to stay the same size and we want to grow."