IT Managed Services Limited

Persona	Q	P	I	Verdict	Key Argument
Financial Analyst	5	5	6	Investigate	Cap table risk (Abrahams' residual shares) + sister entity (06090421) = deal structure unknowns. Repricing erodes during locked-contract window.
Operations Expert	5	6	5	Investigate	Pre-sale buyout likely (65%), but sister entity adds structural I risk. Repricing is Year 2-3, not Year 1. Need confirmed 3+ yr tenure internal candidate.
AI Engineer	5	5	4	Investigate	Financial model works at GBP 180k / GBP 60k EBITDA (26-month payback). Sister entity may mean DC lease/IP outside target entity — breaks automation roadmap.
Risk Manager	4	6	6	Investigate	Exchange EOL cliff NOT behind us — YE26 is the main wave. Three hard gates before NDA. Sister entity discovery partially offsets reduced Abrahams risk.
Search Fund Veteran	5	6	6	Investigate	Pattern: Underpriced Retiring Founder + Product Lifecycle Cliff. Repricing has 34% churn tolerance. One broker call from Promising.

IT Managed Services Limited provides IT management, security, cloud-based hosting, and maintenance support to 135 SME clients (10-30 users each). The business uses a "bespoke cloud platform" hosted through RapidSwitch/iomart Tier 3/4 UK data centres. Founded in 2007, the company is now run by sole director Philip Taylor (67), after co-directors Abrahams and Rumsey both resigned on 4 August 2025. Revenue declined 7.5% (GBP 345k YE24 to GBP 319k YE25), likely driven by Exchange Server EOL (October 2025) forcing client migrations. 80% of turnover is via multi-year contracts, 90% of clients provide repeat business. Listed by KBS Corporate with "offers invited" and described as "fully relocatable or remote."

Central Case (EBITDA = GBP 60k, purchase GBP 180k all-equity)

	Year 0	Year 1	Year 2	Year 3
Revenue	319,000	327,000	363,000	411,000
Costs (inc. automation tooling)	259,000	255,000	242,600	243,800
EBITDA	60,000	72,000	120,400	167,200
Margin	18.8%	22.0%	33.2%	40.7%
Capex (tooling)	—	-15,000	-3,000	—
Free Cash Flow	60,000	57,000	117,400	167,200

Payback: ~26 months | 3yr cumulative FCF: GBP 342k | Year 3 exit value (3x EBITDA): ~GBP 500k

Revenue assumptions: -7% organic decline Y1 (Exchange cliff), repricing GBP 197->300/mo phased at contract renewal (20% base Y1, 30% Y2-Y3), 15% churn on repriced clients, 3-10 new clients/year from freed automation capacity.

Bear Case (EBITDA = GBP 40k, -12% Exchange cliff)

	Year 0	Year 1	Year 2	Year 3
Revenue	319,000	295,000	316,000	345,000
EBITDA	40,000	9,000	45,000	74,000
FCF	40,000	-16,000	42,000	74,000

Bear case payback: 4+ years. Walk-away trigger: EBITDA < GBP 50k at NDA stage.

Month	Action	Expected Impact
1	Deploy PSA (Halo/ConnectWise) + NinjaOne RMM; automate monitoring/alerting and patch cycles	GBP 1k/mo saved (reduced reactive monitoring labor)
2-3	zofiQ for L1 ticket triage + first-response; Claude-based knowledge base from ticket history	0.5-1.0 FTE equivalent (GBP 15-30k/yr)
4-6	Build Exchange->M365 migration toolkit; convert 30-50 Exchange/Lotus laggards to M365-managed	Revenue protection: convert GBP 85k at-risk hosting to GBP 60-70k M365-managed (higher margin)
7-12	Begin renewal-based repricing (GBP 197->280-300/mo); use freed capacity for 10-15 new clients	GBP 50-60k additional revenue at near-zero marginal cost
13-24	Continue repricing rollout on multi-year contract renewals; build automated CE gap assessment tool	Full repricing + Cyber Essentials upsell = GBP 100-150k cumulative revenue uplift

Labor cost reduction: 1-2 FTE equivalent = GBP 30-60k/year

Revenue uplift (repricing): GBP 60-150k/year (Year 2-3, larger than automation savings)

Infrastructure cost reduction: GBP 10-20k/year via M365 migration (lower DC requirements)

Recommended: Share purchase of IT Managed Services Limited (06090409) + IT Managed Limited (06090421) as a group deal. All-equity at GBP 130-160k base + GBP 40-60k earn-out on YE27 revenue retention.

Component	Amount	Notes
Base equity	GBP 130-160k	2.5-3x verified EBITDA, all from buyer's GBP 200k
Earn-out	GBP 40-60k	Paid on YE27 revenue >= GBP 300k (incentivises Taylor to support transition + repricing)
Seller note (CGT deferral)	Optional	Structural edge vs PE — offers Taylor tax-deferred consideration
Total consideration	GBP 170-220k	At GBP 60k EBITDA = 2.8-3.7x
DD costs	GBP 10-15k	Solicitor + accountant
Automation tooling Y1	GBP 15k	PSA + RMM + zofiQ setup
Total capital deployed	GBP 195-250k	Within GBP 200k equity (base) with earn-out deferred

Key terms to negotiate:

•12-18 month transition with Taylor (min 2 days/week declining to 1 day/week)
•Both entities (06090409 + 06090421) in scope — confirm with broker
•Non-compete: Taylor + Abrahams for 2 years, 50-mile radius
•Earn-out tied to YE27 revenue (protects buyer against accelerating churn)
•DC lease assignment confirmed at completion

Risk	Likelihood	Impact	Severity	Mitigation
Sister entity (06090421) holds DC lease/platform IP outside target	Medium	Critical	Critical	Confirm at broker call; insist on group acquisition of both entities
Exchange/Lotus revenue attrition continues through YE26-27	High	High	Critical	Build M365 migration toolkit; convert hosting clients to M365-managed; price cliff into offer
Abrahams retains shares in 06090409 or 06090421	Medium	High	High	Pre-NDA broker question: "Does Taylor own 100% of both entities?"
Philip Taylor unwilling to commit to 12-18 month transition	Medium	High	High	Earn-out tied to YE27 revenue incentivises extended engagement
Staffing reality: 10+ FTE makes business near-breakeven	Medium	Critical	High	Verify payroll total as first NDA-stage disclosure item
No internal promotable candidate for ops lead	Medium	High	High	Identify 3+ year tenure technical staff at NDA stage; budget GBP 35-45k for external hire if none
"Bespoke cloud platform" = Taylor's personal knowledge, not portable	Medium	Medium	Medium	Code review in DD; assess deployability without Taylor
DC lease non-transferable or expensive at renewal	Low	High	Medium	Review RapidSwitch/iomart lease terms; budget for cloud migration if needed
Repricing triggers mass churn (>34%)	Low	High	Medium	Staged renewal-based repricing with service narrative; earn-out incentivises Taylor to retain clients
Listing is stale (>6 months, better-informed buyers passed)	Low-Medium	Medium	Medium	Ask listing date at first broker call; >6 months = yellow flag

Pre-NDA Gating Questions (ask at broker call)

☐Does Philip Taylor own 100% of shares in IT Managed Services Limited (06090409)?
☐Who owns shares in IT Managed Limited (06090421)?
☐Is the DC colocation lease held by 06090409 or 06090421?
☐Is the "bespoke cloud platform" owned/licensed by 06090409 or 06090421?
☐What intercompany agreements exist between the two entities?
☐Is KBS Corporate acting as broker for both entities, or only 06090409?
☐What was the nature of the August 2025 director departures? Any outstanding disputes?
☐When was the listing posted? (>6 months = stale listing concern)
☐How many staff, and what are their roles and tenure?

Financial DD (NDA stage)

☐3-5 years of management accounts (P&L, balance sheet, cash flow)
☐Verified EBITDA / SDE (owner remuneration breakdown: salary + dividends)
☐Total payroll cost and headcount
☐Revenue breakdown: hosted Exchange vs M365-managed vs security vs other
☐Client concentration: top 5 clients as % of revenue
☐Debtor aging, bad debt history
☐Outstanding loans, director loans, related-party transactions (esp. between 06090409 and 06090421)
☐Filed accounts for IT Managed Limited (06090421) — balance sheet, net assets

Legal DD

☐Articles and shareholder agreements for both entities
☐Client contracts: terms, duration, change-of-control clauses, pricing
☐DC colocation lease: term, cost, transfer provisions, renewal date
☐Abrahams share transfer documentation (if completed) or current shareholding
☐Non-compete agreements with Abrahams and Rumsey
☐Any outstanding litigation or disputes
☐IP ownership: "bespoke cloud platform" — code ownership, licensing, dependencies

Commercial DD

☐Client retention rates (last 3 years)
☐Contract renewal schedule (when do multi-year contracts expire?)
☐Exchange/Lotus client count and migration status
☐PSA tool in use (ConnectWise, Autotask, Halo, or manual?)
☐Online reputation (Google Reviews, Trustpilot under trading name)
☐Competitor analysis: who else serves these 135 SMEs in Lancashire?

Employment DD

☐Full employee list (roles, salaries, start dates, tenure)
☐Employment contracts and pension schemes
☐Internal candidate for ops lead (3+ year tenure technical staff)
☐Contractor IR35 status
☐Key person dependencies post-Abrahams/Rumsey departure

IT/Systems DD

☐"Bespoke cloud platform" architecture review (proprietary vs commodity stack)
☐Software licensing obligations (Microsoft, security tools, backup)
☐RapidSwitch DC: rack count, power usage, contract terms
☐Cyber Essentials certification status and scope
☐ICO registration confirmation

Deal	Revenue	Multiple	Notes
M1 (B2B IT Support, South England)	GBP 580k	~3.45x EBITDA	SOLD STC before assessment — MSPs at this size move fast
M3 (Managed IT, Manchester)	GBP 155k	Offers	Severe underpricing (GBP 129/mo); repricing thesis validated
Evergreen/Lyra UK MSP acquisitions	GBP 3M+	Undisclosed	Minimum threshold 10x this business; no competition at sub-GBP 500k
UK MSP sector median (sub-GBP 1M)	—	3-5x EBITDA	Aventis Advisors / ConnectWise data

What personas agreed on

•Unanimous Investigate — all 5 agree the deal warrants a broker call but not an offer without EBITDA verification
•Repricing is the highest-value lever — GBP 197/mo to GBP 280-300/mo has 34% churn tolerance before it fails to beat current revenue; wider margin than expected
•Sister entity (06090421) is a critical discovery — must be resolved pre-NDA, not during DD
•Abrahams departure most likely a clean pre-sale buyout (65% probability) — no new company incorporations in 8 months
•Exchange EOL is a real headwind but manageable under active technical ownership (convert to M365 managed)
•Below PE radar — no Flotek/Evergreen competition at this size; buyer has structural pricing power

What personas disagreed on

•I-score range (4-6): Engineer scored lowest (4) due to sister entity + Lancashire DC; Analyst/Risk/Veteran scored 6. Debate centered on whether operational fragility (August departures) belongs in Q or I. Veteran's reframe ("I measures integration feasibility, not inherited operational risk") moved Ops from 4 to 5.
•Exchange cliff severity: Risk Manager treats it as ongoing structural demolition (Q=4.5); Engineer argues it's a contained one-time step-down (net GBP 42k loss, not GBP 85k, if managed actively). Resolution: depends on what % of revenue is Exchange-specific — a key NDA-stage question.
•Repricing timeline: Engineer/Veteran initially modeled Year 1; Ops/Risk insist Year 2-3 due to multi-year contract lock-in and buyer time constraints. Consensus: Year 2 at earliest, requires Taylor in seat with earn-out.
•P-score: Analyst and Engineer at 5 (distress discount warranted); Ops/Risk/Veteran at 6 (buyer controls anchor, no competition). Both positions defensible — resolves at broker call.

How disagreements resolved

•I-score: converged to 4-6 range (from 4-6 in R1 to 4-6 in R2 — range narrowed slightly with Ops moving 4→5)
•Q-score: converged to 4.5-5 (from 4-5 in R1)
•P-score: split 5/6 (Analyst moved 6→5; Risk moved 5→6)
•Repricing: consensus on Year 2-3 timeline with earn-out structure

Classification: Investigate

This is a structurally interesting deal with a clear value-creation thesis (repricing + automation + M365 migration) for a technical buyer, held back by three binary unknowns that are all resolvable in a single broker call:

EBITDA verification — walk away if < GBP 50k
Sister entity (06090421) scope — must be included in deal or confirmed dormant
Staff composition — need at least one 3+ year tenure technical staff for ops continuity

Next action: Contact KBS Corporate broker. Ask the 9 pre-NDA gating questions. If answers are favorable (EBITDA > GBP 55k, clean cap table, sister entity in scope, listing < 3 months old), advance to NDA and request management accounts for both entities. Open with a GBP 130-160k base + earn-out structure.

Pass triggers: EBITDA < GBP 50k, sister entity holds material assets excluded from deal, listing > 6 months with no reasonable explanation, Abrahams departure was acrimonious with outstanding disputes.

Gate Questions

?Does Philip Taylor own 100% of shares in IT Managed Services Limited (06090409)?
?Who owns shares in IT Managed Limited (06090421)?
?Is the DC colocation lease held by 06090409 or 06090421?
?Is the "bespoke cloud platform" owned/licensed by 06090409 or 06090421?
?What intercompany agreements exist between the two entities?
?Is KBS Corporate acting as broker for both entities, or only 06090409?
?What was the nature of the August 2025 director departures? Any outstanding disputes?

Next Action

Classification: Investigate