Bytes Technology Group ran the rule over more than 100 acquisition targets before snapping up CyberOne, its CEO revealed as she claimed its first-half numbers show its recent sales rejig is paying off.
The LSE-listed software licensing and services powerhouse this morning announced its first acquisition in nine years in the form of 80-employee managed security outfit CyberOne.
The deal follows a two-and-a-half-year acquisition hunt led by Sam Mudd since she was made permanent CEO in May 2024.
“We’ve been very transparent about the fact since I became CEO two-and-a-half years ago that I was looking for M&A to accelerate some of the service areas,” Mudd told IT Channel Oxygen.
“We’ve looked at memos and scrutinised teasers… probably in excess of 100 in two-and-a-half years.”
“We just didn’t’ have time”
BTG had been in talks with Microsoft Security Elite Partner CyberOne since last November, Mudd revealed.
BTG “just didn’t have time” to build a SOC capability for private sector customers, she explained when asked about the rationale for the deal.
“We wanted better control of the customer experience,” Mudd said.
“You’ve only got to look at the ASOS and the Whistles news today to know that security is not going to go away.
“We already have 25% of our GP focused on security. This is just a nod to keep moving that intensity.”
CyberOne is BTG’s first acquisition since Bytes in 2019 acquired Phoenix Software to form the business in its current guise.
Just like Softcat’s £8m acquisition of Oakland last April – but unlike its peer’s $1bn swoop last month on GTD – BTG’s CyberOne purchase was about adding skills rather than scale, Mudd said.
“[Any acquisition] had to align back into strategy, which was either AI, cloud transformation, or security,” she said.
“It’s a small business. It’s only 80 employees, and two thirds of that is in the Philippines. This wasn’t necessarily about acquiring customers; it was about strategically acquiring capability.”
There will be “more of these announcements in the future”, Mudd promised.
“I’m really proud to be the CEO at this moment in time for Bytes and to have announced our first acquisition as a listed business, and hopefully it’s not the last,” she said.
“That answers the question”
Asked about which number most pleased her from the H1 results, Mudd picked out the double-digit gross profit growth shown by both Phoenix and Bytes Software Services.
“Because that answers the question, ‘you’ve been making changes to the business, Sam – last year it was segmentation and this year go-to-market’,” she said.
“The congratulations goes to each of the operations for the resilience of having gone through that and performed, executed and delivered on this,” she said.
Having increased by 19% the previous year, BTG’s headcount rose by a more modest 2% to 1,353 between February and August.
This steep deceleration has more to do with bedding down previous hires than AI, Mudd was careful to stress.
“We had a tonne of heads that came into the business, so it’s actually about getting the value of them and being much more disciplined this year,” she said.
BTG is using AI agents to ensure people “aren’t just being hired for the sake of it” and for “taking some of the drudgery away from them”, Mudd said, however.
“AI plays a role. But am I saying AI means we’re only going to be hiring at 2%? No, I’m not. I’m saying the 2% is more a reflection of the previous higher hiring rates,” she said.
Despite making consistent gains over the last year, BTG’s shares dropped around 11% this morning, which Mudd was at a loss to explain.
“We’ve had one or two South African long-term investors take some money out – maybe they’ve just taken out a little bit of cash while the share price is as it is,” she said.
“But you won’t be surprised to hear that my view is to keep fixated on the growth patterns for the future and the long-term ambition – the share price will follow,” she concluded.
Doug Woodburn is editor of IT Channel Oxygen
