Regular readers will know that I take a somewhat jaundiced view of ITSAs (IT staff agencies) that want to get above their station in life by running a ‘consultancy’ business alongside the core recruitment operation, with the ostensible aim of increasing enterprise value. However, history usually shows that because these are two quite different business models, the ‘sum of the parts’ valuation argument simply doesn’t pan out in real life.
With this ‘caveat’ in mind, I recently met up with Jon Butterfield, CEO of AIM-listed ITSA ReThink Group (readers of a certain age may remember him from his time at Computer People and Best when ITSAs were the darlings of the stock market) and Steve Salvin, MD of Aiimi. Aiimi is the enterprise content management (ECM) and business intelligence (BI) consultancy attached to RTG (see ReThink bucks UK recruitment trend). Manchester-born Salvin previously had VP EMEA roles at workflow software firm, OpenText and at BI company, Microstrategy, for both of which Aiimi is now in effect a value-added reseller.
What helped dispel my initial scepticism about this set-up is that Aiimi has a specific and very relevant focus (i.e. ECM and BI) as opposed to being a general ‘system house for hire’. Aiimi also has real clients, including a substantial contract with Barclays. Aiimi partners with infrastructure services-plus player, 2e2, to host the OpenText and Microstrategy products.
If I am brutally honest, what we have here is an ITSA acting as an incubator for a VAR play. There’s not a huge amount of ‘synergy’ between the two businesses (typical for this sort of set-up), with only modest amounts of cross-selling achieved to date. But my sense is that Aiimi ‘has legs’.
I am sure that Butterfield and Salvin realise that Aiimi’s ‘value’ will never be reflected in RTG’s share price. For one thing, RTG is listed under Support Services and is therefore tracked by a different ‘herd’ - and likewise valued differently - than if it were a software and IT services play. The de facto ‘rules of the game’ for public markets are that you are either ‘Arthur’ or ‘Martha’, so to speak.
So for now, Butterfield and Salvin will have to content themselves with using RTG to help feed and water Aiimi until it is ready for an independent life. And that, I suspect, could be a very interesting transaction indeed.