Managed Services firm, Claranet, has announced it is to buy Star in a deal worth £55m. Star’s expertise spans managed services, unified communications and security. Both firms were founded about 17 years ago, however Claranet has grown to more than twice the size of Star (£120m revenues vs £50m; 700 people vs 250 people).
The acquisition adds nicely to Claranet’s portfolio, and provides opportunities to cross-sell its IaaS, Virtual Data Centre and managed application hosting services into the existing Star customer base. Our view is that there is a strong fit between these two firms giving them a good chance of making that a success.
There is also the opportunity to create something that is more than the sum of its parts. Both are established providers in the mid-market with significant brand presence and credibility amongst buyers. The enlarged portfolio is an attractive option for enterprises that want to do less of their own IT in-house and that want to consume technology services in an alternative way. And increasingly, this is the mind-set of buyers in this size bracket.
If the management team at Claranet can really tap into this trend, the potential to scale will be substantial. In turn, Claranet itself would be an attractive target for purchase by a ‘bigger fish’.