ASX-listed IT systems integrator Synergy Plus (ASX: SNR) says it is over the hump.
Formerly known as ComputerCorp, the company just posted a big turnaround in its financial fortunes for the six months to 31 December 2009 after a recent history littered with the merger and acquisition dramas and high-profile staff churn that has beset many Australian organisations.
Around two years ago, ComputerCorp was negotiating a merger with rival Leading Solutions that would have created one of the largest IT integrators in the Australian market. Publicly things seemed to be progressing smoothly, but at the eleventh hour in March 2008 the deal collapsed.
Since then ComputerCorp's share price has fallen from over $0.20 per share to remain at or under the $0.04 per share mark. But the growth strategy remains centred on the acquisition path.
First came the acquisition of Queensland-based education player, Coretech, in early 2008, and then Victorian education integrator, Paragon Systems, in December that year.
Yet it was a major merger deal between fellow players S Central, ComputerCorp and the then Hyro-owned IBM specialist unit Synergy Plus to form one listed IT integration powerhouse that should have soap opera script writers chomping at the bit.
In the 11 months since the announcement in March 2009, ComputerCorp has: Re-branded to Synergy Plus after successfully executing the $9.3 million part of the three-way deal; lost its initial CEO for the combined entity, former ComputerCorp CEO, Robin Rindel; and then saw acting CEO and S Central’s founder and managing director, Peter Mavridis step down from the same role after only two months to help finalise the merger but ultimately fail.
It also made its eastern sales director, Tony Heywood, redundant; lost its managed services director, Roy Pater; and finally witnessed S Central appoint receivers to the disgust of many of its staff before being picked up by rival Brennan IT.
In the meantime, the old flame, Leading Solutions was checked out and discarded as an acquisition target by renowned PK Business Advantage founder, Peter Kazacos. Leading subsequently hit the wall owing creditors $12.486 million at the time administrators were appointed.
Ironically, two years after failing to get a merger across the line Synergy Plus jumped at the opportunity to pick up Leading staff and assets, finalising a deal with administrators in early February. Synergy Plus Chairman Domenic Martino says if Leading had agreed to the original merger plan two years ago it would "still be alive today".
He also maintains Synergy Plus is now over the "hump" after a tumultuous period and has appointed a new public relations firm to boost the outfit's public image.
"I think we are over the hump and I think there are some more strategic acquisitions we'd probably like to do going forward," he said. "But they are more strategic then the company changing ones we have done in the past."
And Martino may just be right. Compared to its $753,000 loss for the six months to 31 June 2009, Synergy recorded a net profit of $824,000 for the latter six months of the 2009 calendar year.
Its revenues also rose three per cent in the six months to 31 December on the corresponding period in the last financial year. Notably, the integrator achieved a 23.1 per cent increase in one of its new core focuses of services revenue.
"It took a few years to sort it out, because it was an old style box dropping, product focused company where the margins are becoming thinner and thinner," Martino told Computerworld
But smaller margins on product are not the only issue the company faces – integrating the new staff into one operation is likely to pose a significant challenge as it looks to build on its national scale.
"You don't change culture just by hiring a few new people," Martino said. "Some of these acquisitions have been instrumental in helping us with that culture as well as obviously bringing in some really good business and clients. It has taken it from just a product focused thing to having a services bend to it."
But with the pages of one of the more dramatic chapters in the history of Australian IT integrators and service providers only recently turned, many are waiting to see how any new humps on the horizon are scaled.