The recent acquisition of Chester-based Chilli IT by infrastructure and cloud MSP Celerity marks a pivotal moment in the company's growth trajectory as it aims to achieve single-digit revenue growth in FY2024/2025, as outlined by COO Craig Aston (pictured).
Preston-based Celerity was founded in 2002 by Chris Roach and Chris Hall, transitioning from an IT reseller business to focus on IBM infrastructure solutions. Initially an IBM infrastructure reseller, Celerity gradually expanded into Lenovo, Cisco, and other areas.
The company pivoted to managed services in 2016, with Aston joining in early 2017 to help transform it into a service-based business with a corporate structure. This transformation led to a significant investment from private equity firm Business Growth Fund (BGF) in 2021, which supported Celerity's growth and acquisition strategies.
This backing has now led to the purchase of Chilli IT in May, the first of its kind for Celerity, which positions Celerity for steady growth. The combined turnover of the two companies now stands at £40 million, with expectations for further growth in the coming fiscal year.
Aston's highlights this anticipated trajectory: “We are looking at single-digit revenue growth going into the rest of 24/25. The Chilli IT revenue will grow as well, driven by the additional services we can now offer.”
“At a turnover level, we're growing at a high single-digit rate of around 2% in revenue. At a gross margin level, we're seeing low double-digit growth. This growth is very much driven by our expertise in our traditional IBM legacy space, which we are now extending to different customers.
“Our strategy focuses on organic growth, specifically through increased sales. Eighteen months ago, we brought in Mike Gowen as our new Chief Revenue Officer. He has transformed the sales team by changing the sales culture, and we are now beginning to see accelerated sales as a result.”
Expanding technological horizons with Dell and AI
The acquisition not only expands the firm’s financial and technological capabilities but also reinforces strategic direction in the IBM, Dell, and Artificial Intelligence (AI) domains, as Aston explained.
"We've known Chilli IT for a number of years. The area we are famous for is around the IBM infrastructure stack, specifically AIX and Linux. What we didn't do was Power AI. Bringing in Chilli IT brings in some really good skills around the whole Power ecosystem, especially in Power AI."
“It enables us to do more for our existing customers and gives us access to cross-sell with Chilli IT’s customers on various services we offer," Aston added.
While Celerity is a significant player in the Dell partner ecosystem, Chilli IT had not ventured into this space. This presents a unique opportunity for Celerity to introduce Dell Technologies to Chilli IT's customer base.
"We are a reasonable size Dell partner, and the Dell Data Domain systems as a backup device for Power work really well. Chilli IT didn't sell Dell, so we can now offer those solutions to their customers," Aston explained.
Moreover, the integration of AI capabilities is a significant advantage. Chilli IT's expertise in Power AI aligns perfectly with Celerity's vision of expanding its AI-driven services. The acquisition brings in valuable intellectual property such as CopyAssure, a data recovery solution that enhances data backup and cybersecurity services.
"They have interesting backup skills around CopyAssure, which links cyber and backup products within the Power AI system," Aston highlighted.
Cultural and operational integration
One of the critical factors in the acquisition was also the cultural fit between the two companies. Chilli IT, having been in business for 22 years, was looking for a suitable home for its people as its founders planned to step away.
"Culturally, we are quite similar in how we do business and the types of customers we have," Aston mentioned. “This cultural alignment is expected to ease the integration process, making it a seamless transition for both employees and clients.”
Celerity plans to retain the strong Chilli IT brand while integrating its team members into Celerity's existing management structure.
"We are planning to keep the Chilli IT brand because it is really strong in the IBM area. We will bring their people into our management structure over the next 60 days," Aston outlined. “Before the acquisition, we had approximately 70 staff members. Following the acquisition, our team has grown to 85 members.”
This approach ensures that the acquired expertise is fully utilised without disrupting the established brand identity that Chilli IT's clients trust, he said.
Future prospects and challenges
While the immediate focus is on integrating Chilli IT, Celerity is already looking ahead to future acquisitions that will expand their service offerings beyond the IBM ecosystem. The company is exploring opportunities in different areas that complement its existing strengths.
“We expect to pursue another acquisition within the next 12 to 18 months. The next acquisition will likely be in a different area that bolts onto what we do. We are laser-focused on the Chilli IT integration at the moment but will soon explore new targets," Aston commented.
In terms of organic growth, Celerity is seeing significant traction in the data protection and cybersecurity spaces. These areas are critical as organisations increasingly prioritise securing their digital assets.
“We're building a cyber practice, which is now starting to attract some interesting contracts coming our way. This practice is closely linked to data protection, focusing on backup as a service and securing those services alongside related revenue streams.”
The company’s dedication to maintaining a strong cultural fit and leveraging the unique strengths of Chilli IT is evident.
As Aston emphasised, "Our people are key to the business. We have staff with a lot of longevity, and what we provide for our customers is down to our people. Our people and our vendor partners—IBM, Dell, Microsoft, VMware—are crucial to us.
“I believe we punch above our weight, considering we are a relatively small organisation, yet we have some really good customers. Now, it's the next stage of our growth journey. It's an exciting time to be part of Celerity.”
