Cirrus buys L7 Solutions

Recently-listed IT company Cirrus Networks has bought Amcom L7 Solutions for a knock-down price of $500,000, four years after current Cirrus directors Andrew Milner and Matthew Sullivan, along with other L7 shareholders, sold the business for $15 million.

The business has been sold by Sydney-based Vocus Communications, which picked up L7 as part of its acquisition this year of Amcom Telecommunications.

L7 appears to have deteriorated during its four years of corporate ownership.

In 2011 when it was sold to Amcom, it had annual revenue of $40 million and 130 staff and was expected to generate EBITDA of at least $4 million in the year to June 2013.

Vocus said today that L7’s annual revenue had dropped to $28 million and that it made a “small contribution” to Amcom’s EBITDA in the year to June 2015.

The acquisition will provide a big boost to the scale of Cirrus Networks’ operations.

After being established by managing director Frank Richmond in 2013, Cirrus posted revenue of $14.9 million in the year to June 2015.

It listed on the ASX in July, after a reverse takeover of Liberty Resources and a $5 million capital raising.

Cirrus said in a statement it was excited about having the opportunity to revitalise the L7 business, which it said has experienced a steady decline over recent years.

L7 Solutions was established in 2004.

Key players in its establishment were Mr Milner, who is Cirrus chairman, Mr Sullivan, who is a Cirrus non-executive director, and Stott + Hoare managing director Jim Loader, who was the largest shareholder.

Mr Sullivan, whop is a 40under40 award winner, was chief executive until the 2011 sale.

Mr Milner had previously founded Wantree Internet, which was acquired by iiNet, and more recently has established marketing firm Roobix.