01732 759725 Q&A 56 Q&A Technology Reseller (TR) : Babble has thrived since it secured the backing of LDC in 2017. How did that relationship come about? Matt Parker (MP): I joined cloud comms reseller IP Solutions, which was backed by Livingbridge, on February 1, 2016 after the mid-market private equity investment firm had a falling out with the company founders and wanted someone to come in and run the business. I stayed 18 months with the intention of getting the business from £6 million revenue to £20 million revenue through a combination of organic growth and a couple of acquisitions. It became clear relatively quickly that Livingbridge’s experience of the business and the dispute left them disinclined to continue to invest and, quite reasonably, they decided to take the business to market. I persuaded them to let us do a management buy-out, which was backed by LDC, in October 2017. We are now just over two and a half years into our life with LDC. It was always our plan to follow an aggressive ‘buy and build’ strategy and so far we’ve done four acquisitions – two in 2018 and two this year – and put in place the bulk of a dedicated M&A team focused on sourcing deals, doing due diligence on opportunities, putting integration plans together and actually delivering the integration. Material investment in that resource will allow us to grow our business through acquisition by 50% every year. We entered this year as a £20 million run rate revenue business, and we will exit it as a £30 million run rate revenue business; 2021 will get us from £30 million to £50 million; and 2022 from £50 million to £80 million. It is then a relatively small step to get from £80 million to £100 million. This will be the third time I have been involved in growing a relatively small operation into a £100 million business. I did it first at Stepstone, then at Lumesse. Babble will be my third £100 million business and my first in telecoms. TR : Do you see the telecoms market as particularly ripe for a buy and build approach? MP: One thing that struck me when I got involved in the sector was the fragmented nature of the reseller market. There are literally thousands of telecoms resellers in the UK and lots of them are run by people who have been at the helm for a long time and are starting to think about what to do next or how to get out – Pete Dobson founded Lake Technologies 26 years ago and the founder of Diva Telecom, which we also acquired this year, had been in telecoms for 30-odd years. So, yes, the market lends itself to a buy and build approach. You can name half a dozen businesses that are doing something not dissimilar to what we are doing that are already two to three times our size – Southern Comms, Wavenet and others. What’s different about Babble is that with us it’s all about next gen tech; it’s all about cloud-based solutions; and it’s all about recurring revenue – we are 95% recurring revenue. I come from a SaaS background and taking the reseller model and applying SasaS principles to it is what we think differentiates us. With Matt Parker, CEO of Babble Founded in 2001, and backed by private equity firm LDC since 2017, Babble provides a range of cloud-based services across three main areas – Babble Comms, Babble Contact and Babble Cyber. The company already has an annual turnover of £22 million, but, with the backing of private equity firm LDC, is targeting revenues of £100 million by the end of 2023. It plans to get there through a combination of organic growth and an ambitious ‘buy and build’ strategy that has already seen it swallow up Arden Group and Direct Response Plus in 2018 and Diva Telecom and, now, Lakeside Technologies in 2020. The backing of LDC is clearly fundamental to Babble’s success, so we started by asking CEO Matt Parker about the relationship between the two firms. Matt Parker As we go to press, Babble has just announced its third acquisition of 2020, that of Corporate Management Telecom Ltd (CMT), a Braintree-based provider of business telephony and cloud-based services. See our website for more details.