Despite drawbacks of listing as a smaller player, and the hit it took in value following the GFC, Empired grew its annual revenues three-fold, from around $7.1 million at the time of its IPO to more than $20 million — driven primarily by organic growth, according to Baskerville.
The acquisition era
By 2012, things had started to stabilise following the GFC, and the company’s cost of capital had gone down, which meant its share price moved from its six cent-level level back up to around 30 cents a share. When that happened, the company raised more money.
This capital raising effort gave way to its first major acquisition, Conducive, in August 2012.
Conducive, a Perth based business of 80 people, came aboard with a strong pedigree in applications design, development and implementation services in a range of technologies, among them, Microsoft.
Soon after in September 2013, Empired acquired OBS, which at the time was a high-profile Microsoft Gold Partner and leader in SharePoint and CRM solutions nationally. The move was made in a bid to help the company grow on the country’s east coast.
The OBS acquisition delivered Empired new offices across Melbourne and Sydney, Brisbane and Adelaide, and grew the organisation by about $35 million in revenue.
Empired subsequently acquired eSavvy in March 2014, a boutique Microsoft CRM business, which the company claims employs 20 of the top practitioners in Australia.
Then came New Zealand. Intergen, a leading Microsoft partner headquartered in Auckland with capabilities in Seattle and Australia, became part of Empired thanks to a $17.4 million acquisition that was also struck in 2014.
“Intergen really was the largest dedicated Microsoft services player in New Zealand, so it brought us an outstanding, highly regarded asset in that market,” Baskerville said.
It’s all about focus
Clearly, a lot of factors have played into Empired’s rise in the local market, but one thing has remained at the core of its journey through IPO and beyond: its focus on becoming a real player in the managed services space.
Today, nearly 60 per cent of Empired’s revenue comes from the long-term, recurring revenue-style contracts that the managed services market throws us, highlighting the effectiveness of the company’s continued strategy.
“In terms of growing to be a broader solutions-led provider, we now have quite a broad set of capabilities,” Baskerville said. “We think we can now be a real alternative in the market to a company like Accenture, or Fujitsu or CSC.”
For Baskerville, this focus should be at the centre of any strategy aimed at taking an IT services company from one tier to the next.
“If they’re passionate about growing a serious company and being a major player in the industry, then I’d say go for it,” he said.
Making the grade without going public
While many tech companies opt for accelerated growth through an IPO, cyber security consultancy firm, Hivint, proves that you can still make the grade without going public.
And it doesn’t even need to take much longer to reach rampant growth than it does via a public listing, according to Hivint co-founder Nick Ellsmore.
“We’ve gone from a standing start two years ago to having 31 permanent employees — we don’t have any contractors — in under two years, and that’s in a consultancy business without any external investment,” Ellsmore said.
For Ellsmore, the company’s rapid growth is driven in part by the sheer demand in the local market for the services it provides, but also by the company’s philosophy around deciding which work to take on, and how much of it to accept at any given time.
Ellsmore and Hivint co-founder Craig Searle previously ran a company called Stratsec that was sold to BAE Systems in 2010 — the experience gave the duo an appetite for risk that they would not have had if they were just starting out.
“This time around we are much more risk tolerant,” Ellsmore said. “We understand the market much better in terms of knowing that the demand is there, knowing that we can push the envelope in terms of growing faster than would normally be comfortable.
“This time, we are much more happy to believe in the evidence of history that things will happen, and the evidence of history to know that we can sell the projects we need to, deliver the projects we need to, and just go and build it.”
Looking ahead, the company forecasts that it will get to 50 people this year, making it one of the largest local players in the cyber security consulting space.
“So far, our approach has worked really well,” Ellsmore added.