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AlternativeNetworks, a provider of mobile, networks, IT and billing solutions, has made its second acquisition in the IT services space in just two weeks with the purchase of Control Circle. Alternative will pay £39.4m in cash for the managed hosting and cloud services firm (see ControlCircle: Invest to grow), which reported revenue of £21.1m and EBITDA of £1.9m in year ended 30 September 2013.
Earlier in January, Alternative closed the acquisition of InterceptIT (see Alternative Networks buys Intercept for beefed up IT services). Intercept's flagship hosted cloud solution, OnlineDesktop, is a Desktop-as-a-Service solution, delivered on a cost-per-user, monthly subscription basis. In the post-2e2 era, we always get jittery when we hear of companies making multiple acquisitions in quick succession. However, it seems to us that Alternative has been preparing for this for some time. The company floated 10 years ago and has only made a total of six acquisitions to date (including these). It hasn’t made an acquisition since 2010 – during which time it has been strengthening the business by putting more senior management in place. CEO, Edward Spurrier, tells us he’s confident that everyday business operations will not be severly impacted as Alternative ‘digests’ its new purchases.
Alternative Networks is moving deeper into IT services in response to customer demands for these types of offerings alongside the more telecoms-focused services it supplies. Telco-heritage firms have traditionally struggled to be successful in IT services, so Alternative will need to draw strongly on the existing management teams at InterceptIT and Control Circle to ensure its move is successful.
Looking more broadly at the cloud and hosting industry, this acquisition reflects one of our key predictions for 2014: that private equity companies with stakes in profitable and growing firms will start to consider trade sales (subscribers can read our full TechMarketView Predictions report here Predictions 2014 - Race for Change). It’s only January and that’s one firm from the possible sale list already. The question is, who’s next?
