IN THE CHANNEL
A man who has the Midus touch
Midus Communications has a long way to go before it fulfils its potential, but ongoing growth and a key acquisition have catalysed the company’s development, according to Michael Georgiou-Holden, Chief Executive.
M
idus was established in 2005 by Georgiou-
Holden to offer fixed line communication services to business users. The ethos behind the formation of the company was to offer honest and reliable services to end users but without the industry jargon. The formula has paid off with Midus growing at a rate of over 100 per cent each year since its formation. With offices in Suffolk and Essex, Midus caters for all types of businesses from small one- man entities to multi-national and multi-site organisations.
Despite its impressive growth, the company has never followed a policy of concentrating on a specific industry or growth area. “I think times have changed from dealing with just transport or education sectors and trying to make your mark in a niche marketplace. The best offers should be available to everyone however big or small,” commented Georgiou-Holden.
In a move that extends the Midus touch for a wider reach, the firm acquired Puma IP early last month. The deal was passed to Midus by its Channel Director at Chess Telecom. Midus is now
looking to acquire a number of fixed line bases. “This acquisition is critical to our growth in the marketplace,” said Georgiou-Holden. “We have never looked to acquire bases that we can’t comfortably fit into our business and always ensure that we have the man power and capabilities for a smooth and pain free process.”
Snug fit
The Puma IP base is a neat fit for Midus, and the company ethos extolled by Puma IP is very similar while the company also boasts long standing customers. “The deal needed to be right for Puma IP as well as us,” added Georgiou-Holden. “It was more of a home-from- home move that retains the local identity stamp. We like to know our clients by name not an account number.”
According to Georgiou- Holden, the fact that Midus only deals with a select number of key suppliers such as BT Wholesale, Chess and Gamma Telecom puts it in ‘great stead’ when choosing the appropriate product and solution for the end user, from call and line rental packages to SIP and data networking to mobile and broadband solutions. “Not opening our doors to every supplier in the market means that we can
concentrate on receiving the best possible discounts by showing our dedication and loyalty to supplying their services,” he added.
The key influencing factors that shape Midus’ go-to- market strategy are honesty and integrity, which are core to the business. “Midus offers clear and sound advise to ensure that our customers and potential clients receive valid and sound information,” added Georgiou-Holden. “Midus holds a no-nonsense policy which is stuck to by all members of staff and is central to our staff training.”
Georgiou-Holden has observed a big change in the way that its customers use technology. “Midus thrives on being up-to-date with all products so that we can make them relevant to our customers’ needs,” he commented. “We have gone from supplying a reduced call minute to a fully working WL3 platform offering a complete solution on calls, lines services, SIP trunking, mobile solutions, broadband, leased lines and hosted solutions. We are currently looking to supply fibre broadband connections for end users within the price bracket of LLU connections which is due to launch in the next quarter.”
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M&A activity picks up pace
Marcus Allchurch
hile mixed signals are coming out of the wider
economy, M&A activity in telecoms and IT services is continuing apace both in the UK and overseas. From megadeals such as Microsoft’s purchase of Skype for $8.5 billion (10x revenue) through to Easy Group’s acquisition of Kent IT there remains positive momentum in the sector, writes Marcus Allchurch, Telecoms M&A Specialist at BDO Corporate Finance.
In the BDO Public Company Price Index for Q1 2011, we have seen overall transaction volumes improving against H2 2010, now back to the levels seen through 2009. This has largely been driven by an increase in lower mid- market deals. Consistent with what we are seeing in the market, the data reflects an overall cautious but growing level of acquiror confidence and investor appetite to support businesses at the lower end of the mid-market. Investors are keen to invest in smaller companies that have managed to survive the downturn and are now well positioned to embrace growth opportunities over the next few years with the benefit of expansion capital.
n
Against the backdrop of increasing confidence we are seeing a growing pipeline
of deals being worked up in the market, and would expect this to filter through later in the year, increasing deal volumes. In terms of the multiples being paid for deals, this quarter has seen a drop in both the Private Company Price Index (PCPI) and Private Equity Price Index (PEPI).
Consistent with our views earlier in the year, this is perhaps because there are now more companies exploring a sale which is eroding the scarcity premium that was being paid for quality companies in late 2010 and early 2011. This drop is supported by the average public company price/earnings multiple for the Financial Times Non- Financials Index (FTNF) which has dropped slightly from 12.5x to 12.1x.
For the remainder of 2011 we expect continued strong activity in the lower end of the mid-market as investors look for consolidation platforms and follow-on targets, and for high growth companies with innovative business models. In addition, private equity firms with investments acquired in the early to mid-2000s will be looking to exit those investments over the next couple of years, further strengthening supply and deal volumes in the market. n
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