'We have the people but not the customers': Irish IT services firm earmarks up to £15m for big UK acquisition

“I’ve burned a fair bit of money trying to do it direct ourselves and we said ‘this is nuts’,” Auxilion CEO Philip Maguire tells CRN

A leading Irish IT services firm is looking to acquire a "smaller version of itself" in the UK after admitting it "doesn't have enough customers" here despite an organic growth push.

Auxilion, a Dublin-based provider of digitally transformative IT services and solutions with 300 staff, has set aside up to £15m to acquire a "mid-tier IT services provider" on this side of the Irish Sea.

"I've burned a fair bit of money trying to do it direct ourselves and we said ‘this is nuts'," Auxilion CEO Philip Maguire told CRN.

"The path to go is to do a roll-up and buy something in the UK. We're unusual: we have the people and we have the delivery capability in the UK, but I don't have enough customers. I have some customers, but they're white label."

Over the last decade, Auxilion has built up 100 employees in Sheffield, Telford and Warrington that provide managed and IT consulting services to a UK client base that includes Dell, HP Inc, BT, Canford Health, Applegreen and Mainstream Renewable Power.

Auxilion has earmarked £2.5m for organic expansion in the UK that will see it recruit a further 60 staff here over three years.

But Maguire said that his firm could draw on a mixture of its own cash, bank debt and private equity to bolster that organic growth with a big UK acquisition.

"If a huge opportunity comes in, I'm going to take it up a level," he said, pointing to a potential kitty of up to £15m.

"PEs are interested in getting into my space because we have a track record and a consistent revenue and profit. So we're talking to some people in that space."

'A slightly smaller version of me'

Unlike other recent M&A roll ups in the UK managed services space that have centred on the SMB market, Auxilion serves enterprises with more than 500 staff. It specialises in helping companies with their digital strategy, from core infrastructure up to the database layer.

Auxilion generated as much as 90 per cent of its revenues from providing white label services on behalf of the likes of HP and BT in 2008, but indirect revenues have since shrunken to 27 per cent of the total as it moved to more of a direct model. "But a lot of that direct business is in Ireland and Northern Ireland, hence the need for a direct route to the market in the UK," Maguire explained.

Acquiring more direct customers via acquisition is therefore both a necessity and a move to ensure the company doesn't "waste a good recession", he added.

If it was up in the north, it would tie in with our bases in Sheffield and Warrington, so anything in that corridor would work well.

"There's going to be a lot of change in the UK and in Europe. We're in a strong position so it's about maximising that," Maguire said.

Asked to describe his ideal target acquisition, Maguire said he is looking for a "slightly smaller version of me".

"A lot of companies that turn over £10m, £15m, £20m tend to be very SMB in the UK. We're quite unusual in that we're doing a lot of work in corporate/small enterprise."

Firms specialising in modern workplace are high on the shopping list, he said.

"If it was up in the north, it would tie in with our bases in Sheffield and Warrington, so anything in that corridor would work well. But if there is an opportunity down south, and it matches our requirements, we won't be precious because with remote working these days it doesn't really matter where they're located," he said.