Stone Group snapped up by Converge Technology Solutions

Public sector and education specialist Stone Group has become the latest player to be involved in the consolidation wave that is sweeping the channel.

The firm has been picked up by IT and cloud solutions provider Converge Technology Solutions, which is a serial acquirer with 35 deals to its name, with its last deal for Newcomp Analytics coming just last week.

Under the deal, Converge will pay C$59.6m (£39.2m) for an 89% stake in Stone. It is buying a business that generated gross revenue of £140.1m with adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) of £5.9m for the trailing 12-month period to 31 July 2022.

Under the agreed terms, some of Stone’s key management team will reinvest a portion of the proceeds from the sale of their shares into a new Converge UK holding company, which will represent the remaining stake of 11%. After three years, Converge will have the right to acquire that stake.

Converge indicated that Stone would be expected to make an immediate contribution to the business once the deal had closed, both in terms of revenue and adjusted EBITDA.

Converge CEO Shaun Maine said it viewed Stone as a way to increase UK market coverage.

“2022 has been a monumental year of growth for Converge in the European market,” he said. “Along with our recent acquisitions in Germany, we are excited to leverage the knowledge and skills of Stone Group and its teams to continue enhancing our capabilities and offerings to our clients in the United Kingdom and European Union,” he said.

The idea of a fresh face taking a majority stake is not unfamiliar to Stone, which was picked up by Souter Investments in 2019.

Simon Harbridge, CEO of Stone Technologies, said it was becoming part of an ambitious company with expansion ambitions.

“As a growing organisation with a strong team and great platform for significant expansion in the UK and Europe, joining Converge is a benefit both for our clients and for Stone employees. Becoming part of Converge will strengthen our ability to deliver an expanded technology portfolio and support the diverse needs of our clients,” he said.

“Additionally, there is a great cultural fit and the team at Converge will be fully aligned with our environmental and sustainability mission,” he added.

If the deal gets the green light, it is expected to close in the fourth quarter.