boxxe CEO Phil Doye has reiterated his desire to build a £1bn-revenue business following its acquisition of CAE Technology Services, saying doing so is necessary for it to “be relevant”.
The York-based outfit on Friday announced it had followed up its February 2024 acquisition of £90m-revenue Total Computers by acquiring £160m-revenue CAE.
Private sector-leaning Total and CAE both add muscle outside boxxe’s traditional public sector stomping ground.
The CAE deal adds strength with Cisco, a vendor Doye conceded boxxe would struggle to build a successful business around without recourse to M&A.
“Cisco is clearly the market leader in networking, and to get the depth of technical talent, solutions capability and just depth of trading with Cisco you just can’t develop that organically in any short space of time,” Doye said.
“If you want that you have to acquire.”
Doye’s remarks echo those of Computacenter CEO Mike Norris, who last year reflected on how Computacenter acquired BT’s French arm partly to build strength with Cisco after struggling to make headway organically.
“To me its hugely important”
Doye said the deal will propel boxxe’s runrate revenues to “broadly” £650m, taking it one step closer to its £1bn goal.
“I’m still strongly of the belief that in order for us to be relevant we have to scale,” he said.
“Whilst the £1bn is an arbitrary number, if you get there you’ve effectively demonstrated you have enough scale to be able to compete with the large competitors.
“There isn’t some magic thing that happens when you get to £1bn. It just demonstrates the degree of scale and that to me is hugely important.”
CAE counts existing boxxe allies Dell and Microsoft as its other two key vendors, both of which are already firm allies of boxxe.
Doye was philosophical about Microsoft’s decision to aggressively chop rebates on Enterprise Agreements from 1 January (as referenced by the likes of Insight and Bytes Technology Group in recent investor updates [see here and here]).
“There’s been a change in terms of rebate and it’s a negative change, but it is what it is; you just have to deal with it,” he said.
“For public sector at least, it’s becoming a race to the bottom anyway in terms of price – with or without rebates. Regardless of rebates, basing your business on just winning EAs is not a profitable business.”
“One acquisition a year”
boxxe retired the Total Computers name last September, around six months after snapping it up.
What, if anything, will it do differently this time around?
“We feel much more prepared for this integration than we did for Total. We’re clearer about what we need to do better, and what did and didn’t go well last time,” Doye responded.
“Having done an acquisition, we feel better placed to do another acquisition.
“And it fits with our strategic goal, which is that we want to make one acquisition a year.”
Doye said he is “super-excited” about CAE’s software development arm, CAE Labs, as it will bring “some deeper skills” to boxxe.
“CAE is a business I’ve admired for a long time and I’m very excited and pleased to have finally got to a point where we’ve been able to buy it,” he concuded.
Doug Woodburn is editor of IT Channel Oxygen
