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By | Paul Kunert 17th April 2012 15:29

Adapt swallows eLINIA for £13m, plans £100m sales op

Managed services firm has buy-and-build strategy

Adapt, the venture-backed UK managed service provider, is touting ambitions to build a £100m operation inside four years and has taken a small step toward that goal by stumping up £13m for infrastructure outsourcing firm eLINIA.

Lyceum Capital, pumped £30m on London-based Adapt in September last year and the company has started to put those funds to use in the fragmented managed services space.

Talking to The Register, Adapt boss Stewart Smythe said the firm had been eyeing up targets outside of the capital. He said: "This gives us a 70-strong team of technical and operational people [in Cardiff]."

Incorporated in 1997, eLINIA – which offers private and public cloud and managed services – had a turnover of £6.4m in the year ended 31 January 2011, up 33 per cent, and an operating profit of of £345,000 – up 14 per cent.

Smythe said the run rate in fiscal 2012 was £7m and EBITDA stood at £1.65m – meaning that Adapt paid no mean fee to snap up the business. Adapt's revenues prior to the acquisition were £35m.

The plan, however, is for Adapt to stick to its knitting by purchasing "pure IT services" firms. "Our strategy is to get ourselves to £80m to £100m of revenue in the next three to four years," said Smythe.

He said acquisition funding was not an issue but finding the right businesses was more challenging. "I knock back 95 per cent of [opportunities] that pass my desk."

The UK's managed service provider sector is growing at 25 to 30 per cent a year as organisations look to farm out the cost and complexity of overseeing IT, said Smythe, previously group strategy director and board member at ailing C&W Worldwide.

Last month Google partner Cloud Sherpas and Salesforce.com stalwart GlobalOne came together, and only last week Grove Group acquired Cloud Direct.

TechMarketView analyst Angela Eager said it was "only a matter of time" before consolidation in the cloud landscape gathered pace. ®

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