Kerv: 'We have acquired 400 people through M&A but also created 300 new jobs'

Kerv co-founder and CTO tell CRN the secrets to the company’s success through acquisitions and organic growth

Cloud and digital services provider Kerv has seen a five-fold revenue surge in the last three years, adding 400 new employees through acquisition and organically creating 300 new jobs.

CTO Rufus Grig and co-founder Alastair Mills tell CRN how Kerv's differentiated strategy is the key to their success in the last few years.

"M&A is typically based on two things: multiple arbitrage, particularly when you get a high valuation yourself impacting your equity value, and cost synergies where you put similar companies together to reduce headcount costs.

"We've had a very different strategy to drive consistent double-digit organic growth, in contrast to some peers who have struggled.

"But our aim was consistent organic growth to catch up. The best way we believe is to focus on employee engagement and customer experience - those are the top priorities rather than multiple arbitration and cost-cutting."

Mills says in terms of headcount, Kerv has inherited about 400 people through acquisitions.

"Most would expect you to reduce that by maybe 100, but we actually recruited 300 new organic jobs on top of those inherited roles. We aren't shedding people but growing, and I'm trying to look after our team."

The company polls employees weekly using Office Vibe, asking about their development progress. An algorithm assesses how people are doing, which the executive team reviews earnestly as an important measure of satisfaction and engagement in the IT channel.

"We're really proud to be a Great Place to Work accredited company with an equality journey that's thoughtful."

In terms of post-acquisition growth and integration, Kerv says it has been very thoughtful and careful, investing heavily.

"We didn't just dismantle and combine companies," Mills explains. "Over three years we spent around £10m building shared enterprise architecture and are over 90 per cent integrated now.

"We are cautious with M&A, only buying businesses where we see a clear winning strategy around technology or a specific vertical like financial services, public sector, retail, not-for-profits.

"We aim to coalesce around those key verticals and a common Microsoft and contact centre tech stack, targeting complex mid-market to enterprise customers in the public sector with our integrated solutions."

Kerv is about to close its third year with 30 per cent organic growth.

"I don't think any other UK company is delivering that level of organic growth alongside a strategic M&A journey," Mills adds enthusiastically.

New investments

Private equity firm LDC has been on this journey with Kerv for the last three years but recently announced the two companies are parting ways.

As part of the deal, Bridgepoint Development Capital has taken a majority stake in Kerv and LDC has reinvested £30m to support the company's continued expansion.

"The core growth strategy remains the same, with an added possibility of cautiously exploring our first cross-border M&A in Western Europe or North America as our scale increases."

However, Mills says acquisitions will remain focused around those core customer size verticals and its technology stack.

"We could explore bringing in new security vendors or considering multi-cloud rather than just public cloud as we are now.

"But it's probably going to be more of the same: doing more in core IT channel expertise areas where we aim to be famous for the Microsoft ecosystem and Genesys platforms. We can expand into overseas verticals with that same technology orientation."

He says Kerv has explored having a dedicated cybersecurity practice spanning consulting to MDR and pentesting as a different offering compared to its current technology practices.

"Do we develop that organically given our limited capabilities or partner with someone already providing those services?

"No secret we've seriously looked at three or four cyber companies but haven't found the right cultural and technological fit yet."

CTO Rufus Grig also comments on the investment and potential opportunities that may arise: "I think the first key thing is that, as part of this scale curve, acquired businesses can access larger markets they couldn't alone.

"They can bid directly for private sector contracts, go after bigger enterprise projects, and leverage expanded capabilities."

He says about 25 per cent of new contracts this past year combined practices across acquisitions to deliver broader solutions.

"We operate in a growing technology market with ample opportunity. We work hard to have the latest capabilities across strategic Microsoft partnerships spanning their AI innovations, business process automation, contact centre solutions like Genesys in the Magic Quadrant, and more.

"So, giving practices the platforms to drive growth, bringing pieces together into new offerings covering size, capabilities, and geographies, and ensuring we take the strongest total proposition to market."

B-Corp certified?

"For us the sustainability journey came before B-Corp certification," Mills says when asked about Kerv bid to become B-Corp cerified.

"Sustainability is important to us as a company for employees and customers. As we advanced our security journey, we looked for external assurance recognising rigor and authenticity. B-Corp felt like the gold standard sustainability certification.

"Two years ago, we appointed a chief sustainability officer, someone previously acquired who is 100 per cent focused on environmental and social impact across our sustainability agenda.

"We're building toward the number of points needed to pass B-Corp assessment. Our application is in progress for their audit."

Challenges ahead?

When asked about market challenges, both Grig and Mills agreed the economic environment certainly makes things tricky.

"Last year was really tough for fundraising deals over $200m took a long process," Mills explains.

"High interest rates, inflation, players bracing themselves for some impact, though thankfully we've still grown 30 per cent year-on-year. But we're definitely seeing contracts delayed in the past two or three months."

Mills also argues the skills and labour market is challenging in terms of attracting and retaining talent, but remains positive there's no shortage of opportunities and ideas to pursue.