Deal completed in: 4 months
In the early part of 2020, Hornblower took on the mandate to sell Telcoinabox Ltd, a UK-based telecoms and IT reseller delivering leading edge services to long term contracted partners. The company had developed innovative and proprietary technology, systems, processes and sales strategies over a period of 10 years in the UK and from a 20-year Australia & New Zealand pedigree, to enable a distinct position in the UK telecoms industry.
Positioned as a ‘Start-up Telecoms Specialist’, Telcoinabox had developed a complete package offering of billing, marketing, planning, provisioning and customer services along with a range of wholesale business grade Voice, Data and Mobile products telecoms and IT services and support for telecommunications service providers.
The business enjoyed an active customer base of 51 Partners, building this customer base at an average rate of one additional partner per month. A key attraction of the company’s service offering enabled its Partners to resell fixed line, connectivity and mobile services to over 4,000 end customers.
Telcoinabox came to market with a successful model operating for over 17 years, in 3 different countries with British Franchise Association (BFA) approval. The Full Franchise program had also proven successful with each Franchisee paying £20,000 Ex VAT to onboard Vs £9,000 Ex VAT via the company’s Self-Starter Channel.
In addition, Tecloinabox was supported by effective professional front & back office operations which had contributed to an established and consistent recurring revenue base with Partners signed on multi-year contracts. Moreover, forecasted revenues were predicted to reach £2.7m setting the company up for profitability for 2021 and beyond.
Telcoinabox presented a strong prospect for acquisition, with significant opportunity to scale and cashflow forecasts demonstrating healthy long-term returns, subject to strategic funding or integrated support from an eventual buyer.
The company benefitted from a dynamic management team of 3 Directors characterised by a substantial pedigree and industry knowhow. The incumbent Managing Director had played a key role in designing and innovating the Telcoinabox business model into the success it has become, leading the Telcoinabox Team and managing Partner relationships.
The second Director brought over 25 years’ experience in the Australian and UK telecoms markets to the business, having previously headed up the new business development for a major Australian wholesale telecommunications provider. The third Director had owned and run several Australian based telecoms businesses, including CorpTEL and People Telecom, leading them to successful sales and IPOs with the recent launch of Australia’s fastest growing energy retailer on his list of achievements.
Telcoinabox operated with a key billing system which was unique to the business and had attained the exclusive license for this software for the UK and Europe. The software had been developed by Telcoinabox over 10 years to match business needs as both a wholesale biller and retail biller for multi-brands.
It was imperative for Hornblower to secure interest from potential acquirers with the ability and experience of fast tracking a rapid growth business with a proven model to the next level of expansion to further geographic territories. The ideal acquisition was envisaged as a merger with another like-minded local telecoms group with a larger geographic footprint, delivering obvious cost synergies and allowing the sophistication of the Telcoinabox’s offering to accelerate the merged entities’ growth.
Hornblower began the process of marketing Telcoinabox in July 2020, leading with the key strengths of the company’s thriving partner base built over a number of years and the fact that the company was at the point of break-even on profitability and projected to move into profit in the next financial year. Hornblower also delivered a clear message on the ideal profile for a potential acquirer with the ability to drive this growth forward with the additional benefit of achieving some cost synergies.
In the process of sourcing the right acquirer, Hornblower considered the pertinent factor of Telcoinabox’s London location which invariably came with extensive overheads. This factor effectively placed the focus on targeting companies in the South East who could realise some potential cost savings by reducing operating costs. This highly focused drive for a clearly stated ideal acquirer proved successful, generating over 75 serious enquiries across the investment market, ranging from private equity firms through to trade players.
The resultant acquirer was found in the form of a successful Telecoms and Managed Services provider which ticked all of the boxes. This acquirer stated their primary motivation was the key benefit of using the Telcoinabox platform to integrate into its own company.
The sale process came to a favourable conclusion for all parties, with Heads of Terms agreed on the 5th August – less than a month after marketing commenced and the Deal was completed on the 21st of October. The process was led throughout by our International M&A Director and Business Sales & Acquisitions Consultant Mark Sykes.
SOLD – October 2020
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