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Xploite back on acquisition trail by autumn

Paul Kunert

With the backing of shareholders, serial entrepreneur Ian Smith could be back in the market as an acquirer in the next three months armed with around £20m in cash to construct an IT services business.

This week Smith, who owns around 30% of Xploite's shares with COO Tony Weaver, sold the firm's managed services sub Anix for £31.5m, returning a profit of £10.5m in little more than two years since the buy and build strategy began.

This leaves him and his investors with Storage Fusion - a software analysis tool that represented 10% of group sales - and a big bag of cash to re-embark upon the acquisition trail in the not-too-distant future, with IT services firms in mind.

"In terms of what we are going to do next, it's simple to say that we have our eye on a number of assets right now," he said, "provided we have shareholder support we could be back in the market in 12 weeks."

Many industry watchers and resellers have raised an eyebrow to the price paid for Anix in the current market, which represents a 130% return on cash for shareholders.

"What we've done is at complete odds with the rest of the market, most other listed IT companies are trading at a considerable discount to where they were 24 months ago, in some cases they are down 90%," said Smith.

"We now have literally £20m of cash in which to go back into the market at a time when valuations are severely depressed."

Obviously a compete clause with ACS, the new owners of Anix prevents Smith from returning to managed storage services in the mid market but he said there was good growth to be had in IT services in the small business space.

"Equally, if you look at the larger players in IT services, they are all wallowing around, at the moment there doesn't seem to be a critical mass and that represents an opportunity as well," he added.

This was undoubtedly a good time for cash rich businesses to acquire said Nitin Joshi, founder and director at ChannelMoney but he warned some owners still valued their businesses too highly.

"We get a lot of calls from individuals that have aspirations to buy but we don't have a list of companies looking to sell," he said.

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