MSPs face tough investment challenges but Milton Keynes-based Digital Origin has created a perfect fit growth context following its acquisition by US-based investor Evergreen in a deal that met all of CEO James Evans’ imperatives.
The investment is Evergreen’s second acquisition in the UK and enables Evans to continue with his plan for Digital Origin to become the top Connectivity as a Service provider in the UK while preserving everything the business represents. For Evans, the transaction was felicitous and a far cry from the commitments he undertook when he established the company in August 2018. “I was financially liable for its success,” he stated. “I had to put money into the business and personally guarantee and underwrite all debt that we borrowed to make our acquisitions. I take risks all the time but have faith that I will always come out on top. The biggest was starting my first company in 2008. I backed myself 100 per cent.”
Having built and exited a group of telco and mobile businesses in 2015 into an early consolidator, Evans saw what they were doing and, being entrepreneurial, thought he could do better. “They were focused exclusively on the enterprise, but I’ve always enjoyed the SME market,” stated Evans. “I knew that if we took a different approach we would do well in that sector but lacked IT expertise. So we bought our way into IT, acquiring businesses to learn about them.”
Midway through 2023 Evans noted that interest rates weren’t going down and it was becoming harder to borrow money. He had reached the limit of where he could take the business without bringing on institutional debt, which is expensive. He was also mindful of the domestic political landscape and that potential government changes would likely impact borrowing terms.
“We had to make sure that whatever we did Digital Origin’s raison d’être and culture survived,” stated Evans. “Evergreen came along with its perpetual PE model, which I’d never heard of, offering a permanent home for our business, rolling snowballs, long runways, empowerment – it was quite an elixir.”
The deal means that Digital Origin retains its culture, mission, objectives, logo and executive team. “That’s exciting,” enthused Evans. “We’ve been liberated from concerns associated with piling more debt in and are backed by a successful international fund that empowers organisations to drive growth. My role as Chief Executive is to keep an eye on the horizon, take all of our assets and go as far as we possibly can towards our objectives. That can only be achieved through exceptional culture, dedication and service.”
Founding strategy
From the outset, Evans’ growth model was to bring together IT MSPs, connectivity, telco and mobile companies and reshape the way services were being sold. “We were one of the first businesses to sell these elements to customers in a totally wrapped product with one contract, one number to dial and one throat to choke,” he added. “We made it easy for customers to buy.”
Evans characterises his model as being effectively wholesale, enabling clients to consume products in an easy as-a-service way. “When we started this hadn’t really been done,” he noted. “Even today there aren’t too many organisations doing it. Everything is with us and we control the whole experience. That means everyone in the business is totally intertwined with the fate of our client relationships, which is a good thing.”
Accelerating trajectory
The popularity of this model, combined with Evans’ acquisition and cross-sell strategy, significantly catalysed and accelerated Digital Origin’s growth trajectory. “Our journey has been constant whitewater with Covid thrown in the middle,” said Evans. “We made our first acquisition in October 2019, our second in July 2022 and third in March 2023. Our model was to exclusively buy, own and manage IT MSPs, helping them commercially enhance their offering. We identified the white space areas where they hadn’t cross sold and looked to offer those products in.”
Digital Origin started trading from scratch and within five years had reached £11.5 million turnover. This a notable achievement given the challenges faced by Evans, from raising initial finance to buying the first IT business, then successfully integrating and building on the acquired cultures, as well as creating Digital Origin’s own business culture. “Not to mention getting everyone to buy in from a staff and client perspective,” he added.
“We’ve also evolved the product and dealt with Covid challenges. When Covid hit we wondered how we were going to cope. But we did and that is an absolute credit to the quality of the team and the businesses we bought. We have the right sales capabilities and commercial acumen, as well as the right people with integrity and care for clients.”
I take risks all the time but have faith that I will always come out on top. The biggest was starting my first company in 2008. I backed myself 100 per cent
Evans’ main investment areas right now relate to Digital Origin’s SOC which he wants to build out, along with people and operational development to keep pace with the company’s growth. “We’re seeing an increased appetite from clients wanting to embark on a digital transformation journey,” he added. “So we’re investing in our team and capabilities to facilitate this. We’re also reviewing our products, the latest tech and whether our infrastructure is robust enough to carry us forward. After all, the infrastructure that exists to run a five million turnover business is different to a 10 or 20 million organisation. We’re always trying to make sure we’re ahead of the curve.”
Leadership priorities
Evans’ leadership priorities are focused on a clear plan that everyone in the business understands; and he prioritises the evolution of organisational culture, ensuring it is centred on growth, creativity, motivation and fun. Evans has also introduced performance-based remuneration packages across the business. “That stems from years working as a salesman,” he added. “I don’t believe that sales people alone should get a commission so our senior management team have created various overlay compensation packages across all areas of the business. It works well and puts employees in control of their own destiny while removing glass ceilings. The key to leadership success is understanding that the biggest asset in your business is your team.”
Just a minute with James Evans...
Role model:
My father who was very stoic and pragmatic but believed in empowering the people around him.
What talent do you wish you had?
To play the guitar.
If you weren’t in ICT what would you be doing?
If I had my time again I would train to be a lawyer.
Best advice you have been given:
Fortune favours the bold.
Your main strength and what could you work on?
My strengths are endless resilience in the face of any challenge and complete motivation to finish every task. My weakness is impatience – and I could do with looking younger.
One thing you couldn’t do without in your job:
Bob Sweetlove, a good friend and our Operations Director.
Three ideal dinner guests:
Arnold Schwarzenegger, Ranulph Fiennes and Donald Trump. I’m not political but this would make for an amazing conversation and debate.
What do you fear the most?
Heights.
Tell us something about yourself we don’t know:
I speak fluent Spanish.
One example of something you’ve overcome:
The impact of Covid in terms of the business and its landscape.
How do you relax?
Playing sports, tennis and squash. Also socialising, travelling and eating out with my family.
What possession could you not live without?
My coffee cup.
What would you have done differently in hindsight?
I don’t believe in regrets. You learn from everything you do.
Top tip:
Never stop selling. Sales is the lifeblood of any organisation.