A sales process is under way at mid-market managed voice and data hosting biz Six Degrees, with a corporate financier appointed to sniff out interested buyers.
Private equity backer Penta Capital is eyeing up the exit route four years after stumping up £60m to back the former management team at SpiriTel to execute a buy-and-build strategy.
Sources tell us DC Advisory, headquartered in the capital, was brought in to put the business on the market and manage the sales of the VC’s stake.
El Chan understands the buy price that Six Degrees and Penta are looking for equates to 12 times EBITDA – this was £15m in fiscal ’14. As such, channel folk expect another VC to buy the London-based firm.
The Six Degree business was formed via the acquisition of "three platform investments" including UK data centre provider UKSolutions, connectivity firm NetworkFlow and voice outfit Protel.
The company has since made numerous acquisitions, including Cloud Computing Centre, Ultra Speed, BIS, Bluesq, Data Hop and managed services outfit Server Stream and IT telephony provider Aurora.
The sweet spot for the business in the mid-market – firms between 50 and 1,000 seats. It sells a range of clouds, hosting services, colocation, leased lines, an MPLS network and unified comms.
As can be expected for a firm that is staging a roll-up in the fragmented mid-market supplier landscape, turnover has grown rapidly from £20.18m in the year ended March 2012, to £51.5m in fiscal ’13 and £69m in fiscal ’14 – the last filed at Companies House.
But in that time the company reported repeated net losses of £5.34m in fiscal ’12, £6.15m in the next year and £6.39m in fiscal ’14. This was largely due to the heavy debt burden. Long-term loans totalled £90.4m last year.
Interest repayments in the most recent two full years was a combined £12.8m, which wiped out operating profit. This is typical of any private equity-backed outfits.
We have asked Six Degrees for comment but had not heard back at the time of writing. ®