Evolution Capital advises AdEPT Telecom plc with the acquisition of Shift F7

20 August 2018 Author: Admin Category: news

AdEPT, a leading UK independent provider of award-winning managed services for IT, unified communications, connectivity and voice solutions, is pleased to announce that it has signed an agreement to acquire the entire issued share capital of Shift F7 Group Limited and its subsidiaries Shift F7 Limited and Greencorn Limited, a well-established UK based specialist provider of IT services to the commercial sector.

Strategic rationale

The acquisition of Shift F7 fits perfectly into the Company's acquisition strategy as it further expands the commercial IT capability and customer base of AdEPT, whilst providing the Company with continued geographical focus on London and the South East.

Shift F7 is a vendor-independent managed service provider which offers its clients outsourced managed IT and telecoms solutions, including IT support, hosted IT, cyber-security, data connectivity and next generation IP telephony services. The products and services of Shift F7 are highly complementary to those of the existing IT service divisions in the AdEPT Group. In addition, the teams at Shift F7 and AdEPT have been working together for more than 10 years in relation to the supply of telecom and data connectivity services.

AdEPT and Shift F7 have both focused on recurring margin and capital asset light strategies which are highly cash generative. Approximately 75% of Shift F7's gross margin is generated from recurring products and services.

Information on Shift F7

Shift F7, founded in 1995, is a highly accredited IT services provider with over 20 years' experience, offering highly specialised IT support services and technology solutions to more than 200 commercial mid-market customers.

Shift F7 has security accredited dedicated hosted platform environments in London Docklands and Heathrow. Key suppliers include Citrix, Microsoft, HP, Cisco, Ericsson LG and VMWare.

All services provided by Shift F7 are supported by a highly experienced team of IT professionals based at Shift F7's premises in Dorking, Surrey, which will be retained post-acquisition. The senior management team responsible for the strategic direction, technical development and the day-to-day operations of Shift F7 are to be retained within the business post-acquisition.

The unaudited management accounts for Shift F7 and its wholly owned subsidiaries for the year ended 31 May 2018 show turnover and EBITDA on a proforma combined basis of £5.0 million and £0.7 million respectively. Capital expenditure in the year ended 31 May 2018 was £0.2 million. The consolidated net and gross assets of Shift F7 and its subsidiaries at 31 May 2018 were £2.3 million and £3.6 million respectively.


Initial consideration for the Acquisition is £5.0 million in cash less the net debt and tax liabilities of Shift F7 at 31 July 2018 (estimated to be £0.5 million). Pursuant to the terms of the acquisition agreement, the Acquisition is deemed to have been effective from 1 August 2018 and therefore AdEPT will also receive the trading contribution of Shift F7 from that date. The initial consideration will be funded out of the drawdown of AdEPT's existing bank revolving credit facility. Further consideration of up to £2.9 million may be payable in cash dependent upon the trading performance of Shift F7 in the 12 months post-acquisition.

Ian Fishwick, Chief Executive of AdEPT, commented: "We are delighted to have acquired such a high quality, well-run and profitable business with a strong management team.  Shift F7 is an excellent fit because it enhances our market position in IT, particularly in London.  Shift F7 complements our acquisition of OurIT in February 2017 which is also focused on London and South East commercial customers. After the Shift F7 acquisition, more than 70% of AdEPT revenue will be generated from managed services including IT support, unified communications and data networks.  The Acquisition is expected to be earnings enhancing from completion."

“The assistance of Evolution Capital was invaluable in the acquisition of Dorking-based Shift F7. We work very closely with Evolution in developing a clear strategy and the kind of target companies we want to acquire. This acquisition takes us to 75% of our revenue being from managed services and furthers our position as one of the largest IT support companies in London and the South East.”




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