Air IT caps off strong summer with two acquisitions

Portfolio company Air IT supports its strong organic growth over lockdown by acquiring Netstar UK, an award winning, London based MSP and Microtrading, a Birmingham based MSP to more than double in size.

Find the recent Megabuyte article here.

August-backed IT Services provider Air IT supports SMEs (25 – 250 seats) with IT managed services, cyber security, business comms, and business intelligence. Prior to August Equity investment, the business primarily served customers from a variety of sectors across the East Midlands. Clients include training provider Babington, Notts County FC and Nottingham City Transport.

In the initial months of August Equity ownership, the business invested in its infrastructure and processes in preparation for an expansive buy and build. Investment was made in Head Office, with Jon Hardy appointed as CFO alongside John Whitty (CEO) and Ian Brown (Chairman). Ian Brown has worked with August Equity previously, having been appointed Chairman of SecureData, a cyber security services business that successfully sold to Orange Cyber Defence in 2019, achieving a very good return for management and investors.

Air IT traded positively through the Covid-crisis, maintaining its 20%+ growth and increasing average contract terms from c.11 months to 20 months alongside average contract value. Having successfully supported its customer base in transitioning smoothly to remote working during the pandemic, Air IT was awarded the Customer Satisfaction Award at the European MSP Innovation Awards 2020.

Air IT’s buy-and-build strategy has now begun in earnest, with the business acquiring two MSP’s via off-market transactions and in short order. Birmingham-based Microtrading and London-based Netstar UK Limited represent transformational acquisitions for Air IT that increase its customer base from 400 to nearly 1,000 and over doubles revenues and EBITDA.

Netstar services customers predominantly in the Financial, Professional Services, Healthcare and Property sectors across London. The business was recently ranked in the top 50 MSP’s by ChannelE2E and last month was announced as a finalist for the prestigious Customer Experience in a Crisis award, hosted by Awards International.

Microtrading, from its Birmingham base primarily focuses on serving the West Midlands. Like Air IT and Netstar, Microtrading provides a broad range of IT MSP services, with capabilities around Cloud services, cyber security, backup and DR.

The buy-and-build strategy includes utilising Netstar and Microtrading as hubs for future acquisitions in the West Midlands and London, as well as also focusing on expansion into the North West and North East through further M&A. The business is targeting a regional strategy developed by management that allows Air IT to continue to provide a ‘local touch’ to its customers in new geographies through providing on-the-ground customer service experience and engineers.

Megabuyte’s view

“This is certainly how to kickstart a buy-and-build strategy in dramatic fashion. The regional SME play makes sense on paper, and is a nice differentiator against the various other IT services buy-and-builds we’ve seen come to market over the last few years including KervBCN GroupAcoraFreestyle IT, and CSI Group.

Despite our preconceptions, the SME strategy has held up well through the first lockdown, driven by the accelerated need for Cloud-based IT during lockdown, or IT as an enabler of a more connected/online customer experience. With performance relatively unimpacted by the first lockdown, it’s no surprise there’s continued appetite for more deals in the months to come, although we would bring attention to the growing second wave in the UK and how this might trigger various regional lockdowns.”

The full Megabuyte article can be found here.

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