Exertis IT’s new owner can “give us the attention we deserve”, its CEO has asserted as he revealed there were multiple private equity and trade buyers hovering during its sale process.
FTSE 100 firm DCC Group yesterday announced it has agreed to sell Exertis IT to private equity house AURELIUS for an enterprise value of around £100m.
The deal – which is set to close this Autumn – includes Exertis UK Business and Consumer, Hypertec, Exertis Supplies, Exertis Ireland, Macro EV, Exertis Supply Chain Services, MTR and Ztorm.
“Pretty chunky”
AURELIUS’ decision to back Exertis IT continues a pattern of private equity houses investing in multi-billion-revenue distributors, following Apollo and Platinum Equity’s recent involvements with Tech Data and Ingram Micro, respectively.
But talking to IT Channel Oxygen, Exertis IT CEO Tim Griffin revealed that AURELIUS had company in the bidding process.
“They weren’t alone, and as you can probably imagine a combination of trade and financial buyers were interested in what is a really great portfolio,” he said.
Having resolved to refocus on its core energy business last November, DCC Group successfully offloaded its DCC Healthcare business in April.
Although Griffin conceded that selling DCC Technology as one would have been easier from a transactional point of view, its larger scale and diversity meant breaking up the business by geographic and/or portfolio lines was always on the cards.
“The size of DCC Technology – approaching $6bn [revenue] – is pretty chunky and it’s very diverse in terms of geographic footprint across 22 countries and the nature of the portfolio in terms of areas of focus,” Griffin said.
DCC Technology grouped its business into three portfolios, namely Info Tech (which Griffin characterised as “the technology you can see in a workplace”), Pro Tech (“the technology you don’t see in the workplace”) and Life Tech (“what you see in the home”).
“It could have been split along those three lines, or along geographic lines – and any permutation thereof,” Griffin explained.
“From our perspective, the Exertis IT portfolio in the UK and Ireland, plus what we have in Storm – which has a very close association with our retail gaming portfolio – made a lot of sense for us.”
Because Exertis Enterprise (the old Hammer business) and Exertis Cloud are classified as Pro Tech, neither are included in the deal, although both will remain based out of Exertis IT’s Basingstoke HQ.
“Part and parcel of us acknowledging the likelihood of there not being a single acquirer has been us doing some work in the background to enable the businesses to stand independently,” Griffin explained.
“Doubling down on specialisms”
The businesses in scope boast revenues of around £2bn, with Griffin indicating an approximate two-thirds-to-one-third revenue split between the UK and Ireland.
In a LinkedIn comment, analyst and Informa Fellow Steve Brazier branded the deal a “great move for Exertis”.
“Now Tim Griffin gets to define the strategy: broadliner or specialist, UK, Europe or global, volume or value, marketplace, cybersecurity, AI? Plenty of opportunities ahead,” Brazier wrote.
So, what does Exertis IT want to be famous for?
“We think we’re best when we’re focused around our specialist capabilities,” Griffin said, pointing to the new strategy it outlined last November around specialist areas such as AV, mobile and components.
“We are really doubling down on and delivering against our specialist capabilities, so that journey will continue. That laundry list of opportunities highlight other areas and specialisms that if our customers and vendors want us to step into, we will obviously consider.”
“Giving us the attention we deserve”
AURELIUS said it would deploy its ‘WaterRise’ team of specialists to “support a return to operational excellence and growth”.
“DCC had lots of other distractions, and wanted to focus elsewhere,” Griffin said.
“Although they’ve been brilliant owners, having somebody who is really vested in our success and giving us the attention we deserve is really important.
“They have a great set of values that aligns to our people agenda – I think this is going to be really good for our people and so I’m excited in that regard.
“They’re done nearly 300 acquisitions, which is not too dissimilar to DCC, and they’ve got a great track record of growth and transformation of the businesses they bring under their ownership. So we’re excited about what they can help us achieve.
“We are keen to get through regulatory approvals and really kick on.”
Doug Woodburn is editor of IT Channel Oxygen
