adept4 Sold to Pinnacle

Pinnacle Technology has bought fellow IT-as-a-service provider adept4 in a multimillion-pound deal backed by £5m funding from the Business Growth Fund (BGF), with executive chairman Gavin Lyons hailing the swoop as a "pivotal moment for Pinnacle as it completes the turnaround of the business."

Pinnacle has acquired adept4 for an initial consideration of £4.5m in cash plus a deferred consideration of £1m payable in January 2018. A further consideration of up to £1.5m will be payable in March 2018 subject to hitting performance targets in the 2017 calendar year.

The acquisition was part-financed through the issue of £5m loan to the Business Growth Fund with an associated option to subscribe for shares in Pinnacle at a price of 6p per share, representing a 43 per cent uplift from the February placing price.

Frazer Hall's Role in the Sale

Frazer Hall Corporate Finance was advisor to the shareholders of adept4, and were mandated to identify and approach prospective buyers that met certain acquisition criteria. The deal took three months to complete from signing heads of agreement.

Peter Birkett, Chief Executive of adept4 said: “We are delighted with the sale and look forward to working with the Pinnacle board to drive the enlarged group forward. Frazer Hall really helped us in finding the right strategic partner and has helped us previously with our own acquisitions – I would recommend them to anyone.”

About Pinnacle

Pinnacle has also set out plans to change its name to adept4 plc. In the 2015 calendar year, adept4 generated revenues of £5m and earnings before interest, taxes, depreciation and amortisation of £0.75m.

Pinnacle said that adept4 has a strong management team, all of whom will remain in the business, with experience of both organic and acquisition growth. The newly acquired company has approximately 60 customers with average contract lengths of three to six years.

Gavin Lyons, Executive Chairman of Pinnacle, said: "This is a pivotal moment for Pinnacle as it completes the turnaround of the business which we set out to do in January 2016. Having executed five acquisitions and three disposals in just over four months, we have moved from a loss-making company with liabilities to a sustainable operational platform with healthy gross profit margins and high recurring revenues. Following completion of this acquisition and the disposal of the legacy assets we plan to change the Group’s name to adept4. The change will be put to a general meeting on June 13.”

Future of adept4

"Our focus is now on the integration of our acquisitions so that we can scale our asset-light, IT-as-a-service proposition we have for UK SME business. Our strategy remains the same and we will continue to focus on growing the company organically and through acquisition." said Lyons

Headquartered in Northampton, Pinnacle also has offices in Dewsbury, Leeds and London. Meanwhile, adept4 is headquartered in Daresbury with additional offices in Brighton and Aberdeen.

PHOTOGRAPH: adept4 directors and shareholders, Paul Talbot, Steve Cosgrove and Peter Birkett.

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