IBM partner Celerity has vowed to stay on the M&A trail after closing the first acquisition in its 22-year history.
The Preston-based outfit, which ranked 144th in the recent Oxygen 250, has acquired peer Chilli IT in a move that thrusts its revenues beyond £40m.
The deal follows a strategic partnership the duo struck in February.
Acquisition impetus
Talking to IT Channel Oxygen, COO Craig Aston said Chilli’s prowess in the legacy IBM AS/400 space complements Celerity’s strength in IBM RS/6000.
“We were looking for something that would enhance our services and technical proposition, and also something that wasn’t too far away from what we do already,” Aston said.
“We’ve been aware of Chilli for a number of years and have worked with them.
“In the legacy IT market and IBM world we’re in, the skills are getting harder and harder to find because people are retiring. So being able to bring circa 10 really technically skilled people into those areas just made it really attractive,” Aston said.
The deal also hands Celerity some intellectual property relating to back-up software in the IBM System i space.
Chester-based Chilli’s two founders were “ready to finish”, Aston added.
“They wanted to find an organisation that would look after their people properly, and weren’t going to chop it up,” he explained.
“We weren’t looking to rush”
Despite bagging £15m funding from growth capital investor BGF in November 2021, Celerity’s initial priority was to plough on with its managed services transformation rather than M&A.
Some 75% of its gross margins are now generated by services, Aston said.
“We weren’t looking to rush,” he confided.
“We had to do a number of hires and somewhat reshape our own sales team.”
Future acquisitions may be more outside Celerity’s comfort zone, Aston hinted.
“Integrating Chilli is the primary focus. But once that’s bedded down, very quickly we will be looking for more acquisitions,” he said.
“We’re not looking overseas. It’s about buying businesses that will in some way enhance our offering, either IP or technical capability – we’re not looking to buy customer lists.
“The Chilli one was a very natural bolt-on, but we’d probably like to go a little wider with the next one, in the AI or the cyber space. It’s a size thing as well – it needs to be something small enough we can integrate properly.”
Doug Woodburn is editor of IT Channel Oxygen
