Hyped prices bar Redstone

Hyped prices bar Redstone

Voice and data integrator Redstone has admitted its acquisition drive has been hampered by owners overvaluing their businesses.

Recent acquisitions helped Redstone more than double turnover year-on-year to £96.6m for its fiscal first-half to 30 September. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) leapt 131 per cent to £6.5m.

Martin Balaam, chief executive of Redstone, said: “There are areas where we still need to be stronger, such as Microsoft skills, and we are still actively looking.

“It comes down to the quality of businesses and the value owners put on their business. To ensure acquisitions are as earnings-enhancing as before the market re-rating, you have to ensure you are paying less. But sellers of businesses have not taken this on board.

“The challenge thrown at our feet by investors was: ‘You may be good at buying firms, but can you grow them?’. This shows we can.”

Nick Grossman, business development director at rival 2e2, said: “Resellers working in desirable sectors, such as Microsoft Dynamics and hosting, have very heavy price aspirations and there are few enough out there for them to set the price.”