CloudClevr will play a prominent role in rebounding industry M&A activity, its CEO said as the MSP made its first acquisition in over two years.
The Microsoft, Zoom and Mitel partner this morning purchased Flow AI from fellow Rigby Group-backed SCC in what CEO Steve Harris termed a “friendly acquisition”.
This is SME and midmarket-focused CloudClevr’s first deal since it declared itself back in the market in April after snaring long-term funding from NatWest last November.
It had spent the previous 18 months integrating its initial five acquisitions in the shape of NGC Networks, 4Sight Communications, Bamboo Technology Group and Twisted Fish.
Although the Flow AI purchase thrusts CloudClevr’s forward revenue runrate to between £42m and £45m, Harris characterised it as “just one” of several planned deals.
Pointing to ARO’s sale to TalkTalk Business and Gamma’s ongoing sale process, Harris hailed rebounding M&A activity as a positive sign for acquirers like CloudClevr that have fully integrated previous purchases.
“A lot of people now are looking to grow through M&A again,” Harris said.
“[If you look at Gamma], there seems to be a number of people at the table there, which shows things are definitely getting better – it’s a lot healthier for businesses that are in the right place to make acquisitions.
“Growing organically alone in a fairly soft market is pretty tough.
“If you’ve got the ability to go and do M&A, and you’ve got a platform that enables it people will do it. We feel confident that we’re in the market to continue to make acquisitions because we believe in our basic principles.”
“I’m not sure there’s a technical term for it”
Flow AI will form the basis of a fourth ‘technology practice for CloudClevr in the shape of ‘Digital Transformation’, alongside its existing Digital Workplace, Network Services and IT & Security practices.
A specialist in document services when SCC acquired it 2018 (when it was known as Hobs On-Site), £8m-revenue, 90-employee Flow has since expanded its repertoire, Harris indicated.
“We do a lot of work with customers around automation, and that’s where Flow has evolved its business from its document services business to have some pretty innovative automation solutions and services,” he said.
“It sits better under CloudClevr than it does within SCC.
“I guess it’s a friendly acquisition – although I’m not sure there’s a technical term for it.
“The valuation of the business is still based on standard valuation parameters, but obviously it’s a lot simpler.
“It’s a non-competitive process. It’s a lot simpler from a due diligence perspective. It’s fairly light weight, and because all the management team within Flow are moving as part of it, and all the staff are moving, there’s no change whatsoever for Flow customers.”
Talking to IT Channel Oxygen in April, Harris said the plan was to make “one or two acquisitions each year for the next three years”.
“We’ll continue to make further acquisitions that are either complementary to us around capability or that just enables us to scale through additional customers,” he confirmed.
Doug Woodburn is editor of IT Channel Oxygen
