Esteem Systems splashes the cash on SiRViS IT acquisition

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Esteem Systems splashes the cash on SiRViS IT acquisition

Microscope contributor

Esteem Systems has stumped up £10m for maintenance and managed services provider SiRViS IT.

Backed by Primary Capital and Lloyds TSB, this is the second deal Esteem has completed this summer after taking over small Oracle software house Midas IT Solutions in May.

Joe Connolly, Esteem Systems chief executive, said the aim for 2010 is to build a £60m run rate business via acquisition and organic growth.

"We plan to make a couple more acquisitions," he told MicroScope.

One third of Esteem's revenues are derived from services but as with resellers across the industry, it is trying to develop its own IP. Roughly 80% of SiRViS IT's turnover is based on contracted services.

"Our services business was based around delivering services from Sun and Citrix but that is diminishing, we want to deliver our own services as opposed to reselling those from vendors," said Connolly.

Woking-based SiRViS IT is the parent of trading entity Linetex Computer Group - which merged with ATM in May 2007. It provides firms with maintenance and helpdesk services and software support.

It employs 130 staff - effectively doubling Esteem's employee base - who will continue to operate as a standalone organisation under managing director Mark Lewis.

Lewis said "moving into a bigger group is critical," as customers demand a "total solution" from a consolidating pot of IT suppliers.

In the year to 31 May 2009, Linetex sales grew 12.8% to £7.9m, while it made a loss of £256,000 due to an exceptional administrative expense of £772,766 related to a goodwill write down and redundancy costs. In fiscal 2008 it posted profits of £426,940.

Esteem results for the twelve months to the end of June 2009, show that the company retained profits of £2m, down 44% on the previous year on the back of a 22% slide in revenues to £27.2m.


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