We’ve never had it so good, says Zoldan

Opportunities for growing or selling an ICT business have never been better than now according to leading channel mergers and acquisition specialist Adam Zoldan.

Speaking at the inaugural Wildix Partner event staged at Stratford Upon Avon racecourse, the Knight Corporate Finance director said transactions have risen to an all-time high and sector growth is set to return to 16% post-pandemic.  

With Private Equity investments continuing at a pace, this is creating a high level of competition for acquisitions, which in turn is pushing up valuations for the best targets.

“There’s more buyers now than we've ever had in the channel before. It's a really active sector. We have seen 200 deals in the last year and 30 in the last month alone,” he said. 

Zoldan said the effects of Covid 19 meant there were winners and losers in the ICT space. “CPE and PABX business fell off a cliff and mobile providers saw their roaming revenues plummet, but the real winners were those with high levels of recurring revenues. 

"We expect transaction activity to continue at a pace because a whole range of financial institutions really back us. When the hospitality, travel and leisure sectors became hard to invest in during the height of the pandemic, we saw a huge funnel of money targeted at Comms and IT. And that's resulted in a large  number of private equity investments into larger resellers, all of whom are on a ‘buy and build’  strategy, hunting companies to acquire.

“We're in a bit of a positive cycle now. We’ve seen investors generating some chunky returns and this is driving more of them to invest in this sector. That means there's more funding coming in, and it should be beneficial to everyone.”

Zoldan said any profitable reseller business thinking of exiting should have a clear focus on where its business is going and forensic detail on its customer base and financial performance to achieve the best valuation and multiple. 

“The core values are your customers, which might be the size of customers and the vertical sector or geographical sector they are in, your product proposition and go to market policy and then, clearly, your financial performance, which is the objective metric upon which the buyers can base their valuation.”

Questioned why one company can be valued higher than another when they may look quite similar, Zoldan said: “Growth and size are key factors here, but the perception buyers get of a business and the way the management presents themselves is the X factor. There's no way of saying how much more value it can drive but it certainly does.

“Tesla is now worth 16 times as much as Ford, a 100-year-old company that is many times larger than Elon Musk’s EV company. But if you think of your views on Ford and where it’s going, it’s certainly not as clear as Tesla and it’s roadmap. It’s all about adapting to the future,” he concluded. 

Share this story