Clearwater advises telecoms firm on secondary buyout

BIRMINGHAM-based Clearwater Corporate Finance has advised the management team of the UK’s leading provider of telecoms services for small businesses, XLN Telecom, on its secondary buyout by mid-market private equity firm, ECI Partners. The deal sees Zeus Private Equity exit its investment in XLN after three years, at a 4.5x investment multiple.

The investment is accompanied by a significant commitment by ECI to support XLN’s ongoing business development and acquisition programme. As a result, XLN will have the funds available to more than double the size of the business through acquisitions. XLN’s management team, led by founder and group CEO, Christian Nellemann, will continue to run the business following the transaction.

Founded in 2002, XLN specialises in providing small businesses in the UK with high quality, low-cost, fixed-line mobile and internet services. In the last three years, XLN’s revenues have grown substantially from £27m in 2007 to £54m in 2010. In the last year, the company successfully acquired and integrated OneBill Telecom into its operations, with additional investment from Zeus PE.

Key drivers in XLN’s growth have been the management team’s successful development of an industry-leading proprietary technology platform that allows new services to be smoothly integrated into the business, combined with the management team’s highly focused approach to marketing, product development and customer service innovation.

Today, the company has more than 115,000 business customers across Britain, with XLN now operating two non-competing brands in the market – XLN Telecom and OneBill.

• M&A activity boosts Clearwater
• Key Capital unlocks growth for Dwell
• Clearwater puts together cross-border deal
  

Zeus PE originally backed a management buyout of XLN in January 2008, investing £6.63m for a majority stake. ECI has also gone on to acquire a majority stake.

Partner, Nick Jones, led the deal team for Clearwater, supported by assistant director, Richard Shaw, and director, Dan Bowtell.

Mr Jones said: “ECI’s investment is the latest milestone in XLN’s expansion plans, and provides a platform for its strong and well respected management team to achieve notable organic and acquisitory growth.

“Taking into account continued consolidation in the UK and European telecoms sector, with larger, cash-rich companies picking up smaller rivals, this investment puts XLN in a very strong position to further build on its acquisition of OneBill in 2009.”