Destiny is quietly hopping from one acquisition to another
Telecom services company Destiny has quietly doubled its customer based in recent months following two acquisitions. Turnover has grown, from 20 million euros in 2016 to 28 million this year.
‘Rather than looking for an industrial partner, we were searching for a financial partner, who understands acquisitions’. That is what brothers Daan (36) and Samuel De Wever (30) said when Mentha Capital became a shareholder of Destiny in May last year.
The Dutch investment fund injected 10 million euros of fresh capital in the company, acquiring a controlling interest in the process. But the two tech entrepreneurs, who still hold a stake of more than 30 percent in their own company, got exactly what they wanted: a war chest to achieve their ambitions through acquisitions. Moreover, the fund also contributes the necessary know-how for the latter.
At the end of last year, the company made its first acquisition. Destiny acquired its Aalst-based competitor Ergatel, an integrator of telecom services - telephony, internet - and cloud applications, which mainly operates in the Walloon market. The company’s turnover increased to 20 million euros, and the number of employees from 65 to 70.
In recent weeks, Destiny quietly acquired another two companies, i.e., Meritel, a Ghent-based industrial telecom operator and internet provider, that acquired Evonet, which was almost bankrupt, last year and which generates a turnover of 3.5 million euros with 10 employees. ‘This acquisition was done purely for the purposes of consolidation. It increases our turnover and market share’, says Daan De Wever.
The second company to be acquired, IT101, also generates a turnover of 3.5 million euros with 10 employees. In view of the fact that the Brussels-based company is extremely profitable, generating 35 percent EBIT, this is a strategically important acquisition. De Wever: 'Everyone still thinks that we are nothing more than a telecom integrator. But in recent years, we have studied ways to bridge the gap between telecom and IT in an intelligent way. And how to combine all these services - fixed and mobile telephony, VoIP, e-mail, videoconferencing, as well as applications such as Slack - in the cloud. Thanks to IT101, we now also have this IT component.'
‘Our platform integrates everything so that entrepreneurs or employees can seamlessly follow up on their communication. They can make appointments with customers outside the company using the calendar in Outlook (e-mail). The system immediately knows that the employee is not in the office at this time, and cannot be reached. It immediately switches his mobile to silent, so he is not disturbed during the meeting and sets a message so people know when he’s available again. It’s like a high-tech switchboard. What’s more, it’s entirely cloud-based, running on our servers.’
Thanks to this acquisition, Destiny, which was awarded the title of most promising company in 2015, was able to add another much-coveted discipline to its portfolio of services, i.e., cloud security. ‘Next to communication, this is the second pillar with which our company must achieve further growth. We want to secure the e-mail and internet traffic of SMEs’.
Following these two acquisitions, Destiny’s customer portfolio has increased from 2,200 to 4,500, while turnover has grown to 28 million euros. Although the company mainly targets SMEs, it also has a number of major players in its customer portfolio, including Katoen Natie, Standaard Boekhandel, Würth, Fujitsu, Veritas, and Lampiris.
Why do companies choose Destiny instead of other providers of integrated communication services, such as Proximus and Telenet? 'Our salespeople try to understand the business of our customers, explaining our offering in non-technical terms. I think that our culture of entrepreneurship - responding very flexibly, in a very agile way - also appeals to customers.’
But the story does not end here for the brothers. Their ambition is to achieve a turnover of 100 million euros by 2020. De Wever: ‘Next year we want to hit the 50 million euro mark. If we only focus on organic growth, we would only be able to generate a turnover 35 million euros, although, to be fair, this is a 20 percent increase. That is why we are currently negotiating a major international takeover of a company with a turnover of more than 10 million euros.’
The De Wever brothers want to become a real scale-up. ‘Not in the Silicon Valley way, by eating up capital and racking up losses at the bottom end. Our plan is to do this in a healthy, sustainable way. We don’t just want to buy up more turnover. We also want to build a company and create value for our customers. This is one of the most exciting periods since we founded the company in 2008 in our bedrooms.’
Founded: in 2008 by Daan and Samuel De Wever. Business: telecom integration - telephony, internet, security - with an emphasis on cloud services.
Turnover: 28 m euros (2017), including the acquisitions of Ergatel, Meritel and IT101. The objective is to grow to 50 million euros next year.
EBITDA margin: 20 percent.
Customers: 4,500, including large players such as Katoen Natie, Würth and Fujitsu.