'We want to acquire four companies a year': FluidOne CEO Russell Horton talks M&A strategy following SureCloud buy
The acquisitive connected cloud solution provider is gunning to be a £300m company by 2030
FluidOne has made its latest acquisition - this time through its cyber division Cyber Security Associates (CSA) - to snap up SureCloud Cyber Services.
The addition of SureCloud Cyber Services takes the FluidOne group to £109m revenue and 500 employees, with over 50 per cent now being IT and cybersecurity.
The newly acquired company brings penetration testing and specialist cyber risk consulting to FluidOne, whose CEO Russell Horton sat down with CRN to explain the rationale behind the deal.
Horton says the buy focuses on adding a capability Fluid didn't have in-house.
"Risk consulting for SureCloud Cyber Services often opens up a pen testing opportunity. But actually, we can leverage it to open up managed detection opportunities or IT remediation," he says.
"They can't leverage that on their own in the business they're in. But we could.
"So the ability to cross-sell from both their pen testing and risk consulting is high for our wider portfolio of connected cloud."
Horton adds SureCloud has a solid blue chip customer base that fits Fluid's products.
"So predominantly mid-market and enterprise and not SME.
"It fits the sweet spot for our other products. And our sweet spot is mid-market and enterprise. Two thirds of our businesses are mid-market and enterprise.
"For our connected cloud, we always want to have cyber solutions. We're really strong at managed detection, but we weren't strong at pen testing and remediation.
"This acquisition builds out our security toolset. It's not a synergy play. It's strategic to add a skill set we don't have in-house.
"So it really complements our strategy and we've been looking for one in this space with this quality for over two years. It takes our cyber business to over £9m turnover and over 70 people."
Four deals a year
FluidOne has been steadily snapping up MSPs over the past few years.
In 2023 alone, it bought Computer and Network Consultants, project five and Highlander Computing Solutions.
Horton reveals the connected cloud solution provider is on a mission to buy four businesses a year to help it achieve its goal to become a £300m turnover company.
Sharing what he looks for in a potential deal, he explains:
"Our number one thing is businesses that give good customer service because they fit our DNA and early on, the customers will trust them or be open to seeing other services from the group.
"As part of the due diligence, we always survey their top customers. They need to have a high NPS or they won't fit our DNA."
FluidOne's M&A trail follows its strategy to invest in regional IT MSPs to create a branch network for delivered localised services for its SME customers.
This strategy however adapts for different sized businesses, Horton explains.
"I've got a strategy for branch IT networks that serve the sub-200 seat space. And for them, I'm looking for geography.
"I have five branches so far. And I'm looking to increase my geography in the UK by acquiring branch MSPs. Therefore I want half of my acquisitions to be them. It's currently a third of our turnover."
Read on to find out what Horton looks for in a potential acquisition...
'We want to acquire four companies a year': FluidOne CEO Russell Horton talks M&A strategy following SureCloud buy
The acquisitive connected cloud solution provider is gunning to be a £300m company by 2030
Horton also looks for capabilities in an acquisition.
"For example, I'd like to expand our contact centre over Teams. So I have to get contact centre businesses.
"I do IoT, but I'm not doing the software over the top of the IoT. So I'm looking for businesses that do that.
"I have a development team that do Power BI and analytics. But there's other bits in that stack we don't do that I might acquire.
"I have strong skills in Azure, but I might acquire an AWS practice for the customers who have AWS.
"So I'm looking at capabilities in the connected cloud stack in vendors that will complement our customers and make even more customer requirements that we do now."
£300m turnover by 2030
Since joining the businesses in 2018, Horton set out to achieve £100m in turnover by the end of 2024.
The company has since overachieved and is already a £109m group, allowing Horton to switch his sights to an even bigger goal.
"Therefore, this year we can breathe in and look ahead to the plan to be £300m by 2030.
"We've transformed the business, so now it's about scaling it. So this year we're looking at finding four quality acquisitions to branch IT into the complement toolset for over 200. We should be hitting over ten per cent organic growth as well as those acquisitions."
Industry challenges
The current macro economy coupled with high interest and inflation rates are making it difficult for customers to invest confidently, Horton explains.
"People are still investing but there are long sales cycles.
"Plus, I think there's going to be a degree of election uncertainty.
"Uncertainty in the wider market results in customers being less certain in projects.
"Another challenge is getting skilled resources. There are still gaps in the market in the UK in this.
"A lot of our teams are engineers and it's still quite difficult to recruit good people in the UK. There's greater demand than there is supply.
"So being a great place to work to attract and retain people is a key part of our strategy."