Microsoft titan's daddy buys Phoenix. Bytes is going to be a big reselling brother

A disturbance was noted in the reselling channel today when the parent of Bytes UK slurped rival Microsoft licensing solution partner Phoenix Software for £35.9m.

The deal with see York-based Phoenix become the sister-company of Bytes Software Services (BSS) and Bytes Security Partnership, which are subsidiaries of Johannesburg Stock Exchange-listed tech and media conglomerate Altron.

Neil Murphy, group MD at Bytes UK, told The Reg 90 per cent of Phoenix’s business was with public sector, charity and education clients - compared to 30 per cent of his firm’s turnover - and he was lured by its north of England base.

He said the plan is to leave Phoenix operating as a standalone subsidiary, “We aren’t going to integrate the business with the rest of Bytes; I don’t want to start meddling with it.”

This should be music to the ears of the 165 staff at Phoenix who may have been braced for bad news about redundancies when the paperwork on the sale was signed - most acquisitions tend to involve some cost-cutting as the buyer chops costs of the acquired company to maximise the profit on their sales.

Bytes was already among the largest Microsoft LSPs in the UK - below Insight Enterprises and Softcat. LSP used to be a glamorous designation; a title afforded to around 15 to 20 lucky firms in the UK. But these days being a Microsoft licensing titan doesn’t have nearly as much profit potential as it did even just five years ago before Microsoft began chipping away at the fees.

In the 12 months to 31 October, turned over £118.37m in sales, up from £114.5m in the prior financial year. Net profit went up 7.14 per cent to £3.9m. Over at BSS and BSP, sales for the year to 28 February 2017 were £215m.8m, up from £173.9m, and profit went up 13 per cent to £5.47m.

No further buys are planned at this stage, Murphy told us. ®