Babble’s CEO has set his sights on building the UK’s first £1bn-revenue cloud services provider.
Talking to IT Channel Oxygen, Matt Parker said the ‘talk and tech’-focused MSP is on course to complete another eight acquisitions in 2023, bringing its total number of deals for the year to 16.
Having made 34 acquisitions since 2018 under successive private equity backers LDC and Graphite, Babble was top in our recent rundown of the UK’s most acquisitive IT resellers and MSPs.
“We are a £120m runrate revenue business now, and the business is doubling in size every 18 months,” Parker said.
“There’s no reason why we can’t double again over the next 18 months, and double again in the 18 months after that. We have aspirations now of turning this into the first £1bn-revenue cloud services provider in the UK.”
Acquisition agenda
Parker joined Babble in 2016 (when it was still known as IP Solutions), having already overseen 20 M&A deals in the software-as-a-service space.
His mission at Babble was to avoid the common pitfalls that prevent SaaS businesses growing, Parker explained.
“The reason we’re able to have [£1bn in revenues] as an ambition is because of the approach we’ve taken around not having intellectual property in our business and being asset light. We don’t run a datacentre or SOCs, and work with a really small group of partners,” he said.
Babble’s eight acquisitions this year include TechQuarters, which Parker said added a new string to its bow around Microsoft modern workspace and Azure.
“On the back of that, Microsoft has started to talk about Copilot, and all of a sudden we’re sat at the centre of that, as one of the key players in that space,” he said.
Asked about the slowdown in IT services M&A in recent months, Parker stressed that Babble’s acquisition pipeline is stronger than it was at the end of 2022.
“But I don’t disagree that lots of people are thinking a bit longer about things that they were,” he said.
Who are the six ‘horsemen’?
Babble’s acquisition targets typically generate post-synergy EBITDA of between £500,000 and £1.5m, and must align with its ‘talk and tech’ strategy.
But Parker predicted the advent of bigger deals involving Babble or the five other “horsemen” that have driven consolidation of the cloud comms market, namely Southern Communications, Arrow Business Communications, Wavenet, Focus Group and Onecom (the latter three of which featured in our most acquisitive MSPs run down – see here, here and here).
“There are businesses in the £5m-£10m EBITDA range that are coming to market now,” he said.
“At some stage someone’s going to put one or more of the bigger players together… We would be optimistic that we would be seen as an important enough player in this space to be part of that.”
“Historically, businesses of that size in our space either didn’t come to market because they were on a buy-and-build strategy of their own and trying to do something much bigger, or because they didn’t fit the product or the cultural side of things, so didn’t work for us.
“At some stage someone’s going to put one or more of the bigger players together.
“There are six of us that have come from the talk side and a similar number coming from the tech side. I think we’re the only one that sits purely in the cloud talk and cloud tech space.
“We would be optimistic that we would be seen as an important enough player in this space to be part of that. Whether that’s as kingmaker or something else, only time will answer that. But I think there will be bigger transactions, and I expect us to be part of that.”
Doug Woodburn is editor of IT Channel Oxygen
