Voraciously acquisitive mid-market managed data and network services group Six Degrees (6DG) has chalked up its 13th acquisition since its founding in 2011 (see here and work back), buying London based peer, BIS. No financial details were disclosed other than to say that BIS will add revenues of £16m to 6DG's top line, to bring its run rate to some £70m p.a. with £14m EBITDA.BIS was founded in 1998 as Baltic Internet Services. It acquired the UK arm of US-based co-lo player AboveNet (now Zayo) in 2006.
6DG was formed from the agglomeration of data centre player UKSolutions, MPLS provider NetworkFlow and voice services company Protel in a £60m buy-and-build venture backed by UK mid-market private equity firm, Penta Capital. Penta itself put some £40m into the pot. 6DG CEO, Alastair Mills previously led Penta-backed business communications provider SpiriTel which was sold to Daisy for £37m (including £10m debt) in 2010. The BIS acquisition was funded by a new debt facility from Clydesdale and HSBC. Clydesdale had previously banked SpiriTel.
Clearly Mills, his ex-SpiriTel top team, and his backers are out to do it all over again, and I guess you can't blame them. But unless they have discovered an alchemic formula for turning 13 (to date) separate and disparate companies into an homogenous, smooth-running managed services machine, any eventual buyer may well find that the 'whole' will come to somewhat less than the sum of its parts!
Coda: As you can imagine, my somewhat sceptical view elicited a spirited response from CEO Alastair Mills when I spoke to him a short while ago. He made the point that he and his team had done it before at SpiriTel and that the prior 12 acquisitions at 6DG were already "91% integrated". BIS is "the final piece of the puzzle" and he has no further acquisitions planned. Perhaps 6DG is an exception to the 'buy-and-build' rule – and wouldn't it be great if it was. But as I always say, 'the truth is in the numbers' and, for now anyway, those numbers remain opaque.