Comms Group was started in 2007 as a collaboration between two organisations in the telecoms space. They each had a clearly defined role in the marketplace, mobile and fixed lines respectively, and wanted to explore the opportunities created through the synergies of their respective organisations. Both companies were kept separate whilst the exploratory initiative was trialled. The joint venture was a success and both organisations merged to form Comms Group.
Matt Tarry, MD of Comms Group, said: “While both our organisations were successful in their own right, we felt there was a lot more we could achieve together. Our initial joint venture was all about testing the market to see what was possible and our findings proved conclusive. We set ourselves a joint first year’s target of £1m which was exceeded well before the year was up. Clearly, the sum of the parts exceeded the whole and we joined forces permanently, never looking back.”
The market was changing, as was the new organisation’s business model. The company put a lot of focus on selling and supporting refurbished Avaya telephone systems and capitalised on a gap in the market where there was plenty of excess equipment to acquire, refurbish and deliver.
Tarry adds: “During the financial crisis of 2008 there was a general surplus of telephone systems, which we snapped up. There was also demand for the kit which we supplied at a fraction of the retail value and with an attractive support contract.”
The company grew quickly and soon reached a point where they were working out of eight serviced offices over disparate geographies. Management decided to buy permanent offices in Northampton out of which they operated, with up to 30 staff, supplying hosted phone systems, IT & Cloud computing and a raft of support services.
Both of the company’s founders, Paul Simmons and Matt Tarry, decided on inception that they would pursue an exit route of a trade sale after five years or so. However, both owners were enjoying the experience of nurturing and growing a thriving business and decided to dispose of the company only when the right buyer presented themselves.
Matt Tarry says: “We had developed a close-knit team, which ultimately underpinned our success, and there was no way we wanted to just sell the company and leave the staff in the uncertain hands of new owners. Personally, I enjoyed the operational demands of running the company, we were profitable and cash positive and I felt it would take a compelling offer to get either of us (owners) interested. The five-year exit plan would, in reality, take a little longer to execute.”
Specialist advisors were appointed in 2011 to audit and ‘health check’ the business’ contracts and fundamental financial processes to ensure that they were in a strong position to attract the best offer, should one be made. Meanwhile, the company went from strength to strength and the management team continued to build growth from a solid platform.
Tarry continues: “The advice we were actually given told us nothing we did not already know. It was comforting to be told that ‘all our ducks were in a row’ and we were ‘sale ready’ but beyond that, there was nothing new. Confirmation that we had a successful blueprint meant that just kept doing more of the same stuff. Focussing on recurring revenues was the key to continued success.”
Comms Group was approached by an acquirer, received an acceptable offer for the business and the transaction progressed to its logical conclusion. However Evolution Capital then approached the company towards the end of that year and it was agreed that viable alternatives might be explored.
Advice, planning and preparation
Within a week of the first meeting, Evolution had found an alternative buyer in Adept, a publicly listed telecoms business with a solid reputation for acquiring and integrating complementary businesses. Some preparatory work was undertaken, namely:
- A review of the contractual, financial and management information
- The preparation of appropriate materials and documentation
- A realistic timescale for offer and completion
Tarry adds: “We were literally days away from completing the original disposal when Evolution’s approach was made. They reacted incredibly quickly and convinced us that it was worth going the extra mile.
The fundamental part of the deal had to include the correct treatment and integration of our staff and after meeting the buyer we were given the assurances we needed. The chemistry was right, the figures were highly compelling and the contract included warranties to protect our employees. The transaction was completed swiftly in May 2016 and there were no bumps in the road. Evolution shepherded the deal home and made it all happen to allow us to maximise our exit.”
A successful outcome
Comms Group was delighted with the transaction and the post-sale activities have been exactly as anticipated with no deviation from the plan.
Tarry concludes: “Expectations were set at the right level and there have been no surprises along the way – including all pre- and post sales activities. We achieved the right price on the best terms. Of paramount importance was that the staff were happy, content and motivated. Our engagement with Evolution might have been late in the day but their advice and guidance proved very timely.
About Comms Group
Comms Group is a complete IT and Communications solutions provider for small to medium-sized organisations. Based in Northampton and with a team of 30 people the company offers telecoms advice, solutions and services to enable growth.