'Management want to grow the business and push on' - ANS CEO on £200m private equity sale
Manchester-based public cloud transformation specialist will join forces with UKFast as Inflexion takes majority stake
ANS has sold a majority stake to Inflexion, and will join forces with current Inflexion portfolio company UKFast - continuing a pattern of private equity deals in the channel.
The £46m-revenue, Manchester-based Microsoft Azure and AWS partner kicked off a sale process late last year after "burning the boats" of its hardware business and reinventing itself as a public cloud transformation specialist.
It will now be united with UK hosting outfit UKFast under a new, as-yet unnamed holding company, with ANS founder Scott Fletcher (pictured below) cashing in his majority stake for a rumoured £100m.
According to a report by Sky News last week, the deal is rumoured to value ANS - which posted a £5m net profit on revenues of £45.7m in its fiscal 2020 - at north of £200m.
Talking to CRN, ANS CEO Paul Shannon characterised the deal as an MBO, stressing that ANS' management team have reinvested in the business and will stay on to "take the business to the next level".
The deal was signed yesterday, with staff informed at 10am this morning.
"We started the process in late 2020 and it was open to trade and private equity. Inflexion were one of the early runners, and strong runners, and showed a keen interest very early on. We got on well with everyone there," Shannon said.
"I wouldn't say it's been smooth all the way, but these processes never are."
'With the work we've done, it felt like the right time to sell'
As explored by CRN's recent Private Equity Report, an influx of private equity investment into MSPs and resellers means that a quarter of the 283 UK-based MSPs and resellers in CRN VAR 350 are now private equity backed.
The first quarter of 2021 alone saw at least eight platform investments of UK resellers or MSPs by private equity houses, and at least 30 add-on acquisitions (most notably of Olive by Onecom and swcomms by Focus Group), with mooted changes in capital gains tax (CGT) among the drivers, according to the report.
Shannon, however, said that possible CGT changes had "no bearing" on the timing of ANS' sale process, which was instead triggered by the completion of ANS reinvention as a public cloud transformation specialist.
Once the UK's largest Flexpod reseller, by early last year 80 per cent of ANS' revenues came from digital and services after it "burned the boats" of its hardware business (Shannon, pictured left, discussing the transition at CRN MSP North 2019).
"With the work we've done over the last four or five years, it felt like the right time," Shannon said.
"The sellers were ready to hand it over and let us go and run it, and build it into the next stage of what ANS can be. The management team were absolutely desperate to get a grip of it and just go again. With the market the way it is now, it's just so ripe for what we do. It just felt like this is the right time: let's get it done now so we can go and take it to the next level.
"Inflexion are well-known in the market for heavy investment and future investment."
Manchester marriage
Combining ANS with fellow Manchester-based outfit UKFast will create "the UK's independent leader in secure cloud-led digital transformation across the public and private sectors", Inflexion claimed.
ANS' public cloud trasnfromation prowess will complement UKFast's private cloud hosing and security skills, it said, adding that the duo plan to hire more than 100 new staff in the second half of 2021.
Having initially made a minority investment in UKFast in 2019, Inflexion increased its stake from 30 to 75 per cent last May following the exit of founders Lawrence and Gail Jones.
In a statement, Ian Brown - who was installed as UKFast CEO 12 months ago - said: "As a new UK tech powerhouse, the combined group creates tremendously exciting opportunities for our valued customers, our passionate team, and our trusted partners. With Inflexion's vision and support we are creating a unique digital transformation business."
Inflexion management partner Simon Turner added: "ANS has built itself into a UK leader for public cloud services, complementing our existing investment in UKFast. Together, the businesses are well poised to accelerate their growth as the market for cloud and digital services continues to benefit from strong demand."
Former Capgemini cloud boss Paul Nannetti has been appointed chair of the combined group, although ANS and UKFast will continue to operate as separate brands.