By | Drew Cullen 21st April 2005 11:19

TSG secures £25m facility for takeover trail

Lloyd TSB bankroll

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Technology Services Group (TSG), the Newcastle-based accounting software reseller, has signed a £25m facility from Lloyds TSB Corporate, to bankroll further growth.

Set up two years ago by Sage co-founder Graham Wylie, TSG has bought several small dealerships, mostly northern or Scottish, to build a branch network serving small and medium-sized businesses. The company now employs 380 people who flog IT services to 9,000 customers. It claims annual turnover of £38m and now it is gunning for £100m sales within three years.

To do this, it will buy more resellers - it says it is only a third of the way in through its acquisition programme, establishing offices nationwide.

TSG's national roll-up is an unusual strategy - mostly, big firms try to get small and medium-sized businesses through phone, internet, or through strictly local dealers with their local knowledge, and lower overheads.

TSG is taking a different tack. It makes sense for the company to lead in with accountancy software, which is a relatively high-ticket, high-margin sale, with recurring revenues fuelled by customer inertia / lock-in. So the firm has a good chance of succeeding in its aim of becoming the "leading national player in the IT services market for SMEs", especially as there doesn't appear to be that much competition for the title. ®