Exertis IT CEO Tim Griffin has characterised the distributor’s potential sale as “incredibly exciting”, asserting that a new owner could refuel M&A and growth.
LSE-listed parent DCC on Wednesday announced it has begun preparations for the sale of its healthcare arm, and will review strategic options for DCC Technology (the formal name for Exertis) “within the next 24 months”.
The FTSE 100 giant will now focus on its energy business, which generates nearly three-quarters of its profits.
Talking to IT Channel Oxygen, Griffin said DCC had been a “brilliant owner”, before adding that “there’s a better owner out there that will enable us to do more”.
“I think it’s incredibly exciting,” he said.
“DCC made a decision that they want to focus on energy, which means that Technology is somewhat in the cheap seats.
“We want to be someone’s primary concern. The opportunity to get big and continue on the acquisition trail will come with a new vendor, not with the existing owners.”
“The ambition would be a single transaction”
Having previously been the MD of DCC Technology’s entire £5bn global business, in 2022 Griffin was put in charge of turning around its UK&I operations.
The “vast majority” of DCC Technology’s UK&I revenues are generated by its traditional consumer and B2B distribution business (which is pivoting from broadliner to specialist), he said.
But Griffin’s empire also encompasses a number of other brands, including components distributor Hypertec, white-label server and storage distributor Exertis Enterprise (formerly Hammer), second-life mobile phone repair specialist MTR, Exertis Supplies and digital gaming outfit Ztorm (as well as a few Irish businesses).
Globally, Exertis is present in 22 countries, operating across the infotech, protech (AV) and lifetech (consumer electronics, appliances) spaces.
So will DCC sell its Technology arm off in one lump, or break it up?
“I think the ambition would, for simplicity, be a single transaction, but clearly nothing’s off the table – which is why they’re going to take some time to review that,” Griffin replied.
“There are ways in which you can look at the portfolio that makes up the DCC Technology grouping that could be based on infotech, protech and lifetech, or geographically, but the ambition is clearly a single transaction from DCC’s point of view.”
“There’s capital out there that wants to go after distribution”
Despite Canalys Founder Steve Brazier noting that investors in distribution “have largely been disappointed over the last couple of years” (see below), Griffin said the “full spectrum” of trade and PE suitors would be open to Exertis as it seeks a new owner over the coming 24 months.
“There’s obviously trade, and it depends on how much of the elephant they want to bite off,” Griffin said.
“I think PE is also very open. You don’t have to look too far back in time to when both Tech Data and Ingram attracted private equity, and they did very nicely out of it.
“If you look at the Big Four in the UK, the other three [Westcoast, TD Synnex and Ingram] have all gone through changes in capital structure in the last few years, or will do imminently.
“In my mind that says there’s capital out there that wants to go after distribution.”
“Getting well to get big”
Ranking third in IT Channel Oxygen’s Top 50 Must-Know UK Distributors 2024, Exertis saw UK sales drop 8% to £1.65bn in its fiscal 2024.
Griffin said he had been brought into the UK business to help turn it around following its local SAP implementation, with a warehouse consolidation drive kicked off last year.
“I was brought in to roll up my sleeves and get into that turnaround, which has gone exceptionally well,” he said.
“We are driving a programme of ‘get well to get big’, and a new owner will enable us to get big,” he concluded.
Doug Woodburn is editor of IT Channel Oxygen
