Mergers and Acquisitions, Mergers and Acquisitions, MSP, Content

MSP Acquisition: AdEPT Buys London’s Shift F7 Group

AdEPT acquires Shift F7 Group, essentially uniting two managed IT services providers (MSPs) in the United Kingdom. AdEPT expects to pay roughly £7.4 million (about US$9.6 million) for Shift F7, though the exact figure will likely vary a bit.

The buyout formula involves three components:

  • Cash Consideration - Now: £5.0 million
  • Less net debt and tax liabilities of Shift F7 at 31 July 2018: £0.5 million (estimated)
  • Potential earn-out, 12 months post-acquisition: £2.9 million based on various Shift F7 performance metrics.

Shift F7, along with its subsidiaries Shift F7 Limited and Greencorn Limited, is a UK-based specialist provider of IT services to the commercial sector. Shift F7’s product set for telecommunication and IT convergence is highly complementary with its own set of offerings, according to AdEPT.

Nearly three-quarters of Shift F7’s gross margin involves recurring revenue streams, and the deal will enhance AdEPT's earnings from the moment the deal is complete, the companies indicate.

Shift F7, founded in 1995, offers outsourced managed IT and telecoms solutions, including IT support, hosted IT, cybersecurity, data connectivity, and next-generation IP telephony services. In contrast, AdEPT focuses on unified communications, connectivity, voice, and IT.

Potential Business Synergies

The Shift F7 acquisition “fits perfectly” with AdEPT’s buyout strategy as it helps expand AdEPT’s commercial IT capability and customer base while helping sharpen the company’s focus in London and the South East.

AdEPT CEO Ian Fishwick

Indeed, the companies have an existing commercial relationship stretching back more than 10 years, and Shift F7’s senior management team will remain on board after the transition. Likewise, Shift F7’s main operations based in Dorking, Surrey will be retained after the transition.

“We are delighted to have acquired such a high quality, well-run and profitable business with a strong management team,” said Ian Fishwick, CEO of AdEPT. “Shift F7 is an excellent fit because it enhances our market position in IT, particularly in London.”

Following the acquisition, more than 70 percent of AdEPT’s revenue will be generated from managed services, Fishwick adds.

MSPs, IT Services: UK Mergers, Acquisitions

This is the latest in a growing list of MSP mergers and acquisitions across Europe. Other deals we've tracked include: