While scores are bailing out of the IT industry, little-known customer software developer Genseric is on the acquisition trail to round out its hardware services and consulting business.
The Sydney-based company, which also specialises in security and consulting, has scrutinised over 15 businesses in recent months and even put in a bid for Powerlan's business integration unit.
Alex Harper, Genseric's operations director, said he is looking for an entity that is profitable, has an annual turnover of $20 million-$50 million, and a presence in multiple states. However, he added that he "would rather make a bigger acquisition than a smaller one" and is prepared to look at companies in the vicinity of $80 million-100 million turnover.
The plan is to make two large acquisitions to beef up Genseric's software development capability as well as adding an infrastructure for hardware distribution and then look at a series of smaller ISV acquisitions further down the track.
Harper harbours no fantastical ideas about the IT industry being an easy playground in the current climate; it has a finite customer base and an uncertain future. However, he is subscribing to the theory that "there is opportunity in chaos" and has the added luxury of being able to be selective in a buyers' market. "We have to find something that fits [with the existing business] quickly and without overlap so we can get return on investment."
Rather than integrating the operations into one big business, he sees greater value in keeping them as small entities working together under a common umbrella. "Doing the big aggregation like Solution 6 won't fly," Harper said. "Smaller companies can deliver a solution quicker and run leaner and meaner, and I think that perception is starting to gain credibility in the marketplace."
Still, finding a suitable business is no walk in the park. Aside from vendors and brokers trying to talk up the assets of their businesses on sale, Harper said the perceived value of IT operations still needs to be realigned somewhat. Many proprietors interested in selling won't put their businesses with brokers for fear that as soon as the for-sale sign goes up the staff exodus will begin and the customer list will dissolve.
"As soon as you announce that you're going to sell your business, within two weeks, half of the value is gone."