Bumper buyouts for CRN Fast50 success stories

You should run your business as if it's always for sale, or so they say. Certainly, merger and acquisition (M&A) activity has been ramping up in the Australian IT channel, with plenty of past CRN Fast50 companies in the crosshairs of acquisitive buyers. (If you want to enter this year's CRN Fast50, click here.)

Nearly a dozen entrants from the past six years of the CRN Fast50 competition have sold, with prices ranging from $2.7 million to a rumoured $100 million. Acquirers have had a range of reasons: to expand a customer base; to enter new territory; or to add complementary services.

To find out more, CRN spoke to three resellers about their acquisition experiences.

[Click here to find out about all 12 companies]

NSC Group

One of the most high-profile was Telstra's acquisition of NSC Group, a precursor to two more channel deals for the carrier, first with O2 Networks and then with Bridge Point Communications, another CRN Fast50 alumni.

The main driver behind the sale of NSC, which was No.49 in 2009 and No.39 in 2010, was simple – it was time. “We were consistently being approached [by potential buyers] over the last four years," said Craig Neil, former chief executive of NSC.

In 2013, “NSC was coming up to 25 years of age. I thought we were at the tip of where we could go. It was hard to grow the business from there.”

NSC had no debt and was profitable, with 260 staff in five offices generating $80 million a year as Avaya’s biggest reseller. It had a string of blue-chip clients including Suncorp Bank, AGL, Virgin Airlines, Allianz and Foxtel.

Neil realised that the best way to get scale would be as part of a larger organisation with more customers. He also recognised that NSC required investment to take the company to the next technological level. “We didn’t have a cloud story and we knew that was going to be a fairly significant investment. Our board wasn’t prepared to do that."

NSC chose three companies, sat down with their offers and ended up choosing the middle one on price. Why did NSC leave money on the table?

“We felt it [the Telstra deal] was probably the best in line to grow the business and was prepared to take on all our staff, which impressed us,” Neil said.

The price was undisclosed but the Australian Financial Review indicated it was around $100 million – the highest price for a CRN Fast50 reseller so far.

Telstra stayed true to its word, Neil said. All NSC staff moved across and several in leadership positions have moved into much bigger jobs. Former NSC managing director Trevor Boal is now running all Telstra’s contact centre business as director of sales for global enterprise services.

“Our technical staff are very happy. They’re entrenched and doing well. If there are any weaknesses the sales structure was a bit wrong for a bit but they got that right now,” Neil said. “Telstra had a lot of advice on how to migrate the business and they did that really well.”

NSC is still operating separately and revenue has grown from $80 million to $120 million.

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