Excel I.T. Services Ltd. is acquiring RedstoneConnect's systems integration and MSP division for £21.6 million (US$28.63 million) in cash, the two companies have confirmed. ChannelE2E's analysis of financial filings suggests Excel I.T. Services is paying a valuation of roughly 7.2 times annual EBITDA (earnings before interest, taxes, depreciation and amortization) for the assets.

RedstoneConnect is selling the business units to focus on OneSpace, an occupancy management software platform in the commercial real estate market.

Excel I.T. Services has clientele across Europe, the Middle East and Africa. For the year ended March 31, 2017, the company's annual revenues were approximately £23.4 million and operating profit were approximately £2.5 million.

Through the acquisition, Excel I.T. Services gains a stronger foothold in multiple verticals -- including commercial real estate, oil and gas and the legal sector. The acquired systems integration business focuses mainly on lighting, network, cabling and cellular-based projects within office building developments.  The Managed Services division provides desktop, data center and cloud managed services. The two acquired divisions have over 280 customers. 

According to a financial filing, the assets that Excel I.T. Services is acquiring generated the following results for the year ended January 31, 2018:

  • pro-forma revenue of approximately £41.6 million and an adjusted pro forma EBITDA (before central Group costs) of approximately £3.0 million.
  • gross assets of approximately £15.9 million and net assets of approximately £8.8 million (excluding goodwill and intangible assets held in the consolidated accounts).

RedstoneConnect CEO Mark Braund said in a prepared statement:

"The proposed disposal of our Systems Integration and Managed Services divisions represents another exciting development in the evolution of our business. Since the acquisition of Connect IB in 2016, we have been developing our Smart Software solution capabilities with a particular focus on OneSpace, our occupancy management software solution."