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Daisy Group’s Riley: Integration of £200m + acquired beast starts today

Phoenix IT Group adds 3,600 new customers to stables of new parent

A daisy
Flowery future? Daisy and Phoenix are now joined at the hip

Management at Daisy Group today start the mammoth task of integrating Phoenix IT Group, and getting the respective sales staff to cross-sell following yesterday’s purchase completion.

The acquisition of tech services outfit Phoenix is the 48th acquisition Daisy has made since it was founded by chairman Matthew Riley in 2001, and along with the Damovo UK transaction in February, turnover is estimated to be upwards of £600m.

At the top level, Phoenix CEO Steve Vaughan left the organisation yesterday – his work to plug leaking profits and find a buyer is done – and CFO Jane Aikman confirmed she’ll be looking for a new role soon too.

“We are starting integration today,” Riley told us, as he threw more light on the shape of the organisation.

Daisy’s Partner Services division, including support and maintenance to end users on behalf of SIs, telcos and business process outsourcers, is being combined with the same, but much larger unit, at Phoenix.

This division is to be run by Ian Roberts, who has previously headed up Daisy Partner Services, with Phoenix’s Alastair Blaxill set to exit.

The 1,400 engineers working for Daisy and Phoenix will be merged in the Partner Services division, but a Chinese Wall will be erected to minimise channel conflict; Daisy’s other divisions will compete in some instances with the firms it provides outsourced services to.

“The engineering team will be an entirely separate entity,” Riley confirmed.

Roberts will be charged with improving the “skills matrix” of the techies, to “start cross training” and establish an apprenticeship scheme to bring on board roughly 30 newbies each year.

This is something Phoenix didn’t manage to get off the ground.

As we previously revealed, Daisy will also try to get back the Cisco Gold partner badge that was yanked from Phoenix’ corporate lapel in late 2013 over the flouting of TS&Cs.

Phoenix’s Business Continuity/Disaster Recovery and managed services businesses will be rolled into Daisy’s mid-market corporate division that already sells a range of tech services.

John Holts, who heads the mid-market biz for Daisy, will run the merged teams. Mike Osborne, who was the chief for Phoenix and knows the market well, is set to become a sales director.

The Brit arm of unified comms specialist Damovo, that was snapped up some months back, is already integrated within the mid-market arm.

The SMB operation (including lines, ethernet connectivity, mobile, telephone support) sells no tech services. Riley plans to increase cross selling appetite among the workforce to its 50,000 customers.

Part of the rationale for acquisitions, apart from the obvious access to more customers and services, is to rationalise the back office functions including HR, finance, IT, as well as areas such as marketing to save cost.

Riley told us: "We’ll be looking for synergies but the plan is to grow the top line aggressively, that is very important."

As part of thee integration, the chairman confirmed the Phoenix brand will disappear in the next three to six months, as is typical when a company is acquired by another.

As for more buys – which seems highly likely given the firm's track record – Riley said he wants to “get my arms around” Phoenix first. “Nothing for three to four months but we will do further acquisitions.”

He said bank debt is around £300m, or three times EBITDA, “so we are well within the comfortable norms”, but the plan is to reduce this over the next five years.

The debts with private equity firms were not disclosed but Daisy is working with long-term backers that understand the ultimate goal to grow into a £1bn sales organisation, so any rocks are way off on the horizon. ®

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