A ‘whole smattering” of smaller MSPs are now “ripe for acquisition”, according to the CEO of an acquisitive outfit that has just announced its latest strategic investment.
Connectus Business Solutions earlier this week announced it has acquired a 50% stake in Glu Digital.
Since launching in its current guise in 2019, it had before this made six acquisitions in the MSP space.
Number of £1m-plus-profit MSPs ”dwindling”
M&A activity among many of the UK IT channel’s most prolific serial acquirers has slowed to a trickle in 2025 and 2026.
But talking to IT Channel Oxygen, Connectus CEO Roy Shelton claimed a “whole smattering” of smaller MSPs that sit below the M&A radar of the major buy-and-builds are now “ripe for acquisition”.
“There were a number of high-profile acquirers out there – Daisy, Babble, Air IT – but in order to shift the needle for those guys you’ve got to be £1m-£2m EBITDA,” Shelton said.
“The number of MSPs in that space is dwindling, because they’ve either been bought up, ceased trading because of financial difficulties, or just packed up shop and gone home because of the increased requirements in the regulatory environment.
“That leaves a whole smattering of MSPs around the £250,000-£1m EBITDA level that are ripe for acquisition that we will be looking at going forward – but more on a selective basis to grow our business.”
Super Glu
Connectus’ investment in professional services, customer experience, lifecycle management and channel engagement specialist Glu marks its entry into the channel services space.
It follows on from its purchase of the assets of Wrexham cybersecurity outfit I7 Technologies in March and five other MSPs and hosting firms between 2020 and 2024 (namely YouCloud IT, Cybersity, Mango Tech, IT For Growth and PCSC).
Connectus’ organic growth is currently in the “double digits”, compared with the “sub-5%” industry standard, Shelton claimed, adding that it draws 76% of its top line from recurring revenues.
The Doncaster-based outfit will now seek further M&A in both the managed and channel services markets under the respective banners of Connectus Group and Digital Connect Group, Shelton revealed.
“Connectus wanted to be a more channel-friendly company, but we lacked the knowledge and the experience of the channel. Glu want to grow and lack some internal resources to enable them to do that,” Shelton said.
Potential channel conflict generated by an MSP like Connectus entering channel services “was a consideration”, Shelton acknowledged.
“I also believe the MSP space is collaborating more now together than ever before”, he added, however.
“There are gaps in every MSP strategy that hopefully Glu can complement and help bridge those gaps.”
“We thought, ‘we can do better than that’”
Before the Glu deal, Connectus had grown its revenues to £6.5m and headcount to around 20 – thrusting it closer to the £10m revenue goal Shelton and business partner Paul Ruocco set when they launched the business.
“We bought 90% of the business back in 2019 and rebranded from Eximus Solutions to Connectus, because we didn’t like the branding,” Shelton recalled.
“When we acquired it, it was doing £0.5m a year, had one office, two engineers, and about 60 or 70 customers. We were doing connectivity through our own fibre network, and very little else.
“I was the original founder of [telecoms scale-up] ITS Technology Group, and ran that for five years. I thought I was building another Altnet, but we sat down and thought about it and concluded, ‘we can do better than that’.
“The Altnet market is scattered with loss-making businesses that are struggling to service that debt, and there’s a lot of consolidation going on in that space, purely and simply because of survival. We didn’t want to get back into that very patient-capital, deep-pocket requirements of an Altnet, so we decided to go down the MSP route.”
With the addition of Glu, Connectus is set to turn over £10m next year, said Shelton, who still owns 80% of the company with CFO Ruocco.
“We’re always looking at complementary acquisitions in the MSP and the channel space now, mainly around cyber, hosting and AI and compliance,” Shelton said.
“The free market of companies available for sale at above £2m EBITDA has dried up, and those larger acquirers will not be interested in dipping down into sub £2m.
“We don’t have to go through months and months of due diligence and investment committee appraisals, and if we feel that it fits the needs of our business, which are very clear, we’ll do it.”
“Sweat the details”
What painful business lessons has former BT and Nortel exec Shelton amassed during his time as a high-flying IT and comms exec?
“I’ve learned: sweat the details,” he responded.
“It’s all about the details.
“But when I was younger, I was a bit more of a maverick.
“It caused misaligned strategy. We were off on a tangent; different areas were going off like a box of fireworks at times.
“Maturity brings more attention to detail.”
Doug Woodburn is editor of IT Channel Oxygen
