365itms doubles in size with 'first, but not last' acquisition

MSP doubles turnover to £20m by snapping up Poole-based rival Deverill

Two years after taking the helm of 365itms, serial channel entrepreneur Steve Ellis has overseen his first acquisition at the private equity-backed managed service provider, and has promised more will follow.

Reading-based 365itms revealed to CRN it has acquired Poole-based Deverill, a move it said doubles its turnover to £20m, propels headcount to 100, and boosts its skills with Microsoft and HP.

Staff at both firms were told this afternoon.

Ellis told CRN the deal marks "the start, not the end" of an M&A drive that he was brought on board to steer.

Deverill fulfils the brief of being services focused, Ellis said, adding that its skills complement those of 365itms.

"We have a lot of skills in UC, networking, telephony and security and the areas where we could do with more skills would be in servers, storage and desktop, which is where Deverill's skills lie," he said.

"Their service desk offers desktop support, which we couldn't do on our service desk. They have a stronger relationship with Microsoft and are a Silver partner with HP, where we had no relationship. This enables us to offer a much stronger end-to-end offering than we could before."

Deverill is a Microsoft Azure partner, which Ellis said would mean his firm can offer public cloud alongside its own private cloud infrastructure.

The duo had been in talks since last summer, said Ellis, who confirmed Deverill's Poole office will be retained.

"In that time period we talked to about half a dozen companies and chose Deverill to be our first acquisition," Ellis said.

"This isn't the end, but just the start. We will continue to look for strategic acquisitions that strengthen our services business, predominantly around annuity services but also professional services. We're not going to buy a £20m product reseller because we are an MSP, and don't want to dilute that."

365itms has a channel services business in the shape of 5i, which Ellis said would also benefit from the acquisition.

"We are hoping to offer a broader range of services to our channel partners than we were able to before," he said.

Ellis (pictured) has a pedigree of building channel firms through acquisition, having built up and sold his reseller Notability to Logicalis in 2005, overseen several acquisitions while at Logicalis, and then orchestrated the merger of IBM VARs AssureIT and Apex in 2011.

Ellis said there is no ultimate revenue goal for 365itms, which he also invested in when he joined the firm two years ago, three years after private equity backer LMS Capital came on board.

"It is the value, not the volume, of revenue that is important to us," he said.

"There are lots of people aiming for £100m turnover but our business is not being measured on revenue, but on the profitability of our annuity revenue streams."