Microdata buys 1stlevel, which comes with both revenue on existing services and market-leading specialist competencies on AV.
It is the first acquisition of a series focusing on small and medium-sized IT outsourcing companies.
The acquisition strategy, which is financed by the private equity fund Vækstpartner Kapital, has not been seen before among smaller IT outsourcing companies in Denmark.
First target: 100 million
“We need to round the 100 million in revenue in 3 to 5 years,” says CEO of Microdata, André Dommer. Roughly speaking, the plan is to acquire at least 50 million more in revenue, and the rest is organic growth. The acquisitions must give Microdata a broad base of competencies, and organic growth must have at least the same pace as the market.
Unusual acquisition strategy
“It is new to consolidate the hosting and IT outsourcing market among smaller companies with 10 to 20 employees. As we have just read about in the media, we typically see acquisitions of significantly larger units being merged and streamlined, often with a focus on cost synergies. The size of the new large companies entails a risk that the smallest customers will drop out and be picked up by smaller, often cheaper and more local providers, ”says André Dommer. This is exactly what he wants to avoid by letting the acquired companies continue with their local presence:
“I think one of the reasons why it has not yet succeeded in acquiring and merging the smaller IT outsourcing companies is that the owner managers are having a hard time letting go of the ownership. Therefore, a key part of our setup is that the owner-managers, in the same way as when the larger companies are acquired, have the opportunity to invest in Microdata Holding and continue as co-owners. Then they still have their ownership and thus a financial upside to fight for, which gives them a reason to continue in the same high gear as before, and just as importantly: Customers experience no change in the team to which they have entrusted their IT, there is a lifeline in just about every business. ”
“In addition, we believe in the local presence, so we have no plans to close offices down to save money unless the offices are next to each other.”
“We will analyze the services, workflows and technologies where the various companies are sharpest, and then disseminate them in the overall Microdata, for the benefit of both customers and employees.”
“Happy employees are the prerequisite for our growth. We need every single one of our talented employees for the growth journey, and one of my most important tasks is to ensure that the team stays happy with their work, develops and that we all run towards the same goal. ”
Kapitalfond baker op
Kapitalfonden Vækstpartner Kapital bought into Microdata in February to realize the acquisition strategy, where the focus is on acquiring competencies and local customers rather than reducing costs.
The goal is to build an IT outsourcing company that maintains its local roots and can continue to provide the IT services that are most important to small and medium-sized customers.
Brian Jørgensen, partner in Vækstpartner Kapital and board member of Microdata, says:
“VækstPartner Kapital backs up financing through acquisitions and strategic sparring, but otherwise the operation is left to André Dommer and the rest of the management.”
“We see an opportunity to scale the small, skilled IT outsourcing companies, and create a new large player, which is characterized by a completely different proximity to customers than is known from the existing, dominant suppliers in the Danish market.”
1stLevel is looking forward to better growth opportunities
The owner managers in 1stLevel, Brian Møller and Allan Munkholm Ellegaard, are looking forward to joining forces with Microdata:
“We have a lot of happy customers and provide really good service, and now we look forward to being able to concentrate on developing the business and making it even better. Our customers will experience that we can do even more, and then we look forward to delivering our AV solutions to even more customers at Microdata, ”says Brian Møller, director of 1stLevel and now a shareholder in Microdata.
Synergies for growth
IT service typically covers daily support and management of IT operations, ie. outsourcing of the IT function, as well as hosting the customers’ solutions.
Where typical acquisition strategies focus on scale and savings (typically referred to as “cost synergies”), Microdata will focus on lifting what the acquired companies do, towards the customers they already have, and with the existing employees.
Here are the synergies that the smaller IT outsourcing company is entering into a different setup where there are many more different specialists and therefore they can deliver tasks and new services to their clients which they have previously had to say no to.
Within hosting, there are economies of scale where one can strengthen the setup for the smaller ones. All hosting today is cloud, which can be technically set up in many ways, but large scale is almost unconditionally an advantage for both end customers and operations. As a starting point, acquired companies must be migrated to Microdata’s setup, so that the company only has one technical setup to manage and support.
In addition, administrative burdens are lifted from the owners of the acquired companies, who are typically owner-managers with their fingers down in total.
The CEO of Microdata: André Dommer
André Dommer joined Microdata on 1 May and replaced the owner-manager Jan Helm Hansen, who will continue on the board and as co-owner.
André Dommer has extensive experience from the IT service industry, including from Jay.net and most recently Solteq.
Source: IT-Kanalen by it-kanalen.dk.
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