Getronics CEO on HMRC winding-up petition: An 'embarrassing' blip with cash in the wrong places

Corporate expansionism to blame for issues, claims bossman

Getronics' CEO has opened up on its recent and "very, very embarrassing" winding-up petition from HMRC over non-payment of VAT, claiming it was an unintended by-product of corporate expansionism.

As revealed by The Register late last month, the services integrator claimed multiple acquisitions and subsequent restructuring led to "operational issues", but vowed to resolve the situation promptly.

Nana Baffour, the bossman at Getronics, told us the debt owed to the British tax collector has been settled, and that HMRC is "no longer a claimant".

So how did a company that has a $1.3bn turnover find itself in this sticky position?

"It is very, very embarrassing," he said. "As you know, we've built a $1bn-plus business in the last two-and-a-half years, significantly based on acquisitions, a global business, integrating.

"One of the challenges, as with any global business, is that we have to get cash in certain locations at certain times. We run 23 countries, so frankly it was one of those very unfortunate things where our processes didn't work the way [they] should have worked."

Some of the back-office functions have been consolidated to fewer "administrative hubs" as can happen in any chunky tie between organisations as management, in Baffour's words, look for "synergistic value creation".

Baffour, via Brazilian-based Bottega InvestCo, bought Getronics in 2017 for €220m with backing from private equity houses White Oak and Permira. He subsequently signed off on the purchase of US-based managed service provider Pomeroy and ITS Overlap in France. The group turns over $1.3bn a year.


Supply chain sources told us Getronics similarly has had problems paying tech suppliers on time, which – along with the HMRC debacle – has caught the eye of credit insurers.

"The picture of people being concerned, that is all legitimate," said Baffour said. "Unfortunately HMRC feeds the fire.

"As part of our integration we had to embark on significant cost cuts, and you know in Europe it is quite expensive to achieve cost cuts because of severance and so forth, so we have definitely been managing, as part of our strategy, suppliers. And so that coupled with some of the processes that are not working… has resulted in a situation where I think some of our suppliers have not gotten paid as they should have."

He again pointed to its rapid growth and plans to "streamline" the group as the cause.

Man eats toast while looking at watch, clearly late for something. Photo by Shutterstock

HMRC slaps Getronics with winding-up petition: It'll be sorted out today, blurts tech services firm


"I think it is very unfair if people want to look at individual issues and try to metastasise that into something more. If we are speaking five years from now, and having this [same] discussion, OK, I can accept that. I wouldn't want to minimise some of the anxiety that some of our suppliers may have felt, I think it is very legitimate. But by the same token, I think that some of it is without context, and maybe we haven't done a great job about communicating some of the internal processes that we've been going through, and we take the responsibility for that."

Sources told us Euler, the UK's largest insurer, has reduced lines of covers for Getronics, which only adds pressure to the business's cash flow.

"The thing that you have to understand about the credit insurers is that – and people don't fully appreciate it – every time there is a change of control in a company, there is a series of work that the various credit insurers have to understand – who are the new owners, what is the support, what is the financial situation," Baffour said.

Getronics has a Dutch and US holding, "so when we come down to the local level, we have to educate the credit insurers and that education sometimes takes time. And so in the meantime while you are trying to educate people, they do what you would expect them to do which is to say 'OK, we'll hold off now until we better understand the picture'. So again, people try to make it darker than it is."

Rivals in recent weeks claimed they received a batch of CVs from Getronics sales people following what one described as a "throttling" of the sales commission plan by the integrator.

Baffour said: "All of us know that the technology space is one the fastest growing [industries] and therefore there is a fight for talent all of the time and that is the backdrop we are fighting with."


He accused some rivals of trying to poach his staff, but admitted there was also a reworking of how it pays sales staff. "Historically, the way that people were commissioned was all over the place," he said.

"What we've tried to do is simplify it. If you are a sales person, your value to the business is probably less revenue in terms of what you are bringing in than gross margin. We pay our bills with gross margin, we don't pay our bills with revenue or with pipelines that you build. So we've simplified the commission programme to be focused on gross margin, to be focused on services, and for some of those people that is new, that is not what they like because it is a change and so there is an element of that."

Sales folk at Getronics can earn more money, he insisted, but claimed some prefer to be at an employer where they "can make the most money for contributing the least".

Baffour told us the alterations his management are making to the company are in no way unique to Getronics.

"What I am saying is that a lot of our issues, even liquidity, are a function of the process changes we are going through. Again, it is more complex than people just say we have a liquidity issue, I think that is a bit simplistic. I do think that we have a lot of process improvement, integration, changes that we are doing, and, yes, in some ways, some of that has caused a strain on our liquidity because we are transforming and we need to invest."

With a complex group structure of a privately held entity, The Register has not been able to view Getronics' profit and loss accounts, and so cannot comment on the debt profile or the short-term trends.

Baffour refused to "get into debt profile" because there is "confidentiality", but insisted "that our lenders and equity holders are very supportive of what we are doing and working together with us to make sure that we do the appropriate investment in the business to support our clients and employees."

Suppliers are watching developments at Getronics very closely, given its size and rapid expansion. Baffour has been an entrepreneur for nearly two decades, investing in and selling data centre businesses and managed services providers. He may need all his experience to captain this tanker. ®

Similar topics

Other stories you might like

  • Lonestar plans to put datacenters in the Moon's lava tubes
    How? Founder tells The Register 'Robots… lots of robots'

    Imagine a future where racks of computer servers hum quietly in darkness below the surface of the Moon.

    Here is where some of the most important data is stored, to be left untouched for as long as can be. The idea sounds like something from science-fiction, but one startup that recently emerged from stealth is trying to turn it into a reality. Lonestar Data Holdings has a unique mission unlike any other cloud provider: to build datacenters on the Moon backing up the world's data.

    "It's inconceivable to me that we are keeping our most precious assets, our knowledge and our data, on Earth, where we're setting off bombs and burning things," Christopher Stott, founder and CEO of Lonestar, told The Register. "We need to put our assets in place off our planet, where we can keep it safe."

    Continue reading
  • Conti: Russian-backed rulers of Costa Rican hacktocracy?
    Also, Chinese IT admin jailed for deleting database, and the NSA promises no more backdoors

    In brief The notorious Russian-aligned Conti ransomware gang has upped the ante in its attack against Costa Rica, threatening to overthrow the government if it doesn't pay a $20 million ransom. 

    Costa Rican president Rodrigo Chaves said that the country is effectively at war with the gang, who in April infiltrated the government's computer systems, gaining a foothold in 27 agencies at various government levels. The US State Department has offered a $15 million reward leading to the capture of Conti's leaders, who it said have made more than $150 million from 1,000+ victims.

    Conti claimed this week that it has insiders in the Costa Rican government, the AP reported, warning that "We are determined to overthrow the government by means of a cyber attack, we have already shown you all the strength and power, you have introduced an emergency." 

    Continue reading
  • China-linked Twisted Panda caught spying on Russian defense R&D
    Because Beijing isn't above covert ops to accomplish its five-year goals

    Chinese cyberspies targeted two Russian defense institutes and possibly another research facility in Belarus, according to Check Point Research.

    The new campaign, dubbed Twisted Panda, is part of a larger, state-sponsored espionage operation that has been ongoing for several months, if not nearly a year, according to the security shop.

    In a technical analysis, the researchers detail the various malicious stages and payloads of the campaign that used sanctions-related phishing emails to attack Russian entities, which are part of the state-owned defense conglomerate Rostec Corporation.

    Continue reading
  • FTC signals crackdown on ed-tech harvesting kid's data
    Trade watchdog, and President, reminds that COPPA can ban ya

    The US Federal Trade Commission on Thursday said it intends to take action against educational technology companies that unlawfully collect data from children using online educational services.

    In a policy statement, the agency said, "Children should not have to needlessly hand over their data and forfeit their privacy in order to do their schoolwork or participate in remote learning, especially given the wide and increasing adoption of ed tech tools."

    The agency says it will scrutinize educational service providers to ensure that they are meeting their legal obligations under COPPA, the Children's Online Privacy Protection Act.

    Continue reading
  • Mysterious firm seeks to buy majority stake in Arm China
    Chinese joint venture's ousted CEO tries to hang on - who will get control?

    The saga surrounding Arm's joint venture in China just took another intriguing turn: a mysterious firm named Lotcap Group claims it has signed a letter of intent to buy a 51 percent stake in Arm China from existing investors in the country.

    In a Chinese-language press release posted Wednesday, Lotcap said it has formed a subsidiary, Lotcap Fund, to buy a majority stake in the joint venture. However, reporting by one newspaper suggested that the investment firm still needs the approval of one significant investor to gain 51 percent control of Arm China.

    The development comes a couple of weeks after Arm China said that its former CEO, Allen Wu, was refusing once again to step down from his position, despite the company's board voting in late April to replace Wu with two co-chief executives. SoftBank Group, which owns 49 percent of the Chinese venture, has been trying to unentangle Arm China from Wu as the Japanese tech investment giant plans for an initial public offering of the British parent company.

    Continue reading
  • SmartNICs power the cloud, are enterprise datacenters next?
    High pricing, lack of software make smartNICs a tough sell, despite offload potential

    SmartNICs have the potential to accelerate enterprise workloads, but don't expect to see them bring hyperscale-class efficiency to most datacenters anytime soon, ZK Research's Zeus Kerravala told The Register.

    SmartNICs are widely deployed in cloud and hyperscale datacenters as a means to offload input/output (I/O) intensive network, security, and storage operations from the CPU, freeing it up to run revenue generating tenant workloads. Some more advanced chips even offload the hypervisor to further separate the infrastructure management layer from the rest of the server.

    Despite relative success in the cloud and a flurry of innovation from the still-limited vendor SmartNIC ecosystem, including Mellanox (Nvidia), Intel, Marvell, and Xilinx (AMD), Kerravala argues that the use cases for enterprise datacenters are unlikely to resemble those of the major hyperscalers, at least in the near term.

    Continue reading

Biting the hand that feeds IT © 1998–2022