Gobblefest on horizon for managed services pair

Corporate financier appointed by Adapt, as Six Degrees edges closer to sale

The sales process for a couple of native data centre providers is gaining some momentum, with Six Degrees edging closer to a deal and Adapt appointing a corporate financier to market the business.

London-based Six Degrees called on DCC Advisory in February to sell the voice and data hosting firm by April, as we exclusively revealed, with private equity backer Penta Capital looking to cash in on its asset.

Penta forked out £60m four years ago to finance a buy and build strategy that was executed by the former management team at SpiriTel. Six Degrees was born out of the three platform investments including UK Solutions, NetworkFlow and Protel.

Sources tell us the negotiations have reached the second stage of a deal, which is likely to be struck next month or in early July. The remaining bidders are understood to be mainly venture capitalists.

El Chan believes Penta are looking for a sale price that is equivalent to roughly 12 times EBITDA, which was £15m in fiscal ’14.

Adapt and overcome

Eslewhere in the market, managed services, cloud and hosting outfit Adapt has appointed an M&A and corporate finance advisor ARMA Partners to punt the business from autumn or Q1 next year.

This would indicate a sale is not likely on this side of 2015, as expected, but ARMA may have its work cut out to find a buyer at the asking price, believed to be around £150m, a source claimed.

But in the last set of financials for fiscal ’14 ended June, EBITDA was £4.55m, down from £5.27m. This would mean any buyer would need to cough up a multiple of 32 times EBITDA. ®

Tom Wells, partner at ARMA is running the sales process. Previously he worked at Merril Lynch where he was a managing director and head of telecom investment banking for EMEA. He did not return a call for comment.

Private equity firm Lyceum Capital took a majority stake in Adapt for £30m in 2011, and is also eyeing up the exit.

The problem for businesses such as Six Degree and Adapt is that they are vulnerable to the strategies of the cloud giants including Microsoft, AWS and Google, that are currently slashing prices to beat each other.

It is likely these firms will need to offer more specialist services to survive the price war in the longer term, and to maintain their costly infrastructure and win new customers.

Six Degrees refused to comment and Adapt did not return our calls. ®

Similar topics

Other stories you might like

  • AI tool finds hundreds of genes related to human motor neuron disease

    Breakthrough could lead to development of drugs to target illness

    A machine-learning algorithm has helped scientists find 690 human genes associated with a higher risk of developing motor neuron disease, according to research published in Cell this week.

    Neuronal cells in the central nervous system and brain break down and die in people with motor neuron disease, like amyotrophic lateral sclerosis (ALS) more commonly known as Lou Gehrig's disease, named after the baseball player who developed it. They lose control over their bodies, and as the disease progresses patients become completely paralyzed. There is currently no verified cure for ALS.

    Motor neuron disease typically affects people in old age and its causes are unknown. Johnathan Cooper-Knock, a clinical lecturer at the University of Sheffield in England and leader of Project MinE, an ambitious effort to perform whole genome sequencing of ALS, believes that understanding how genes affect cellular function could help scientists develop new drugs to treat the disease.

    Continue reading
  • Need to prioritize security bug patches? Don't forget to scan Twitter as well as use CVSS scores

    Exploit, vulnerability discussion online can offer useful signals

    Organizations looking to minimize exposure to exploitable software should scan Twitter for mentions of security bugs as well as use the Common Vulnerability Scoring System or CVSS, Kenna Security argues.

    Better still is prioritizing the repair of vulnerabilities for which exploit code is available, if that information is known.

    CVSS is a framework for rating the severity of software vulnerabilities (identified using CVE, or Common Vulnerability Enumeration, numbers), on a scale from 1 (least severe) to 10 (most severe). It's overseen by First.org, a US-based, non-profit computer security organization.

    Continue reading
  • Sniff those Ukrainian emails a little more carefully, advises Uncle Sam in wake of Belarusian digital vandalism

    NotPetya started over there, don't forget

    US companies should be on the lookout for security nasties from Ukrainian partners following the digital graffiti and malware attack launched against Ukraine by Belarus, the CISA has warned.

    In a statement issued on Tuesday, the Cybersecurity and Infrastructure Security Agency said it "strongly urges leaders and network defenders to be on alert for malicious cyber activity," having issued a checklist [PDF] of recommended actions to take.

    "If working with Ukrainian organizations, take extra care to monitor, inspect, and isolate traffic from those organizations; closely review access controls for that traffic," added CISA, which also advised reviewing backups and disaster recovery drills.

    Continue reading

Biting the hand that feeds IT © 1998–2022