Gresham backed 2escape2 makes its fifth acquisition in ten months with the £22m acquisition of Prime Business Solutions

Gresham-backed IT services group, 2escape2, announces the successful completion of its latest acquisition. 2escape2 has acquired Newbury headquartered Prime Business Solutions ("Prime") for £22m. Prime is one of the leading providers of voice/data convergence technology, such as voice over IP, and other leading edge technologies into a broad range of organisations such as House of Fraser, Halliburton, Vodafone and Dresdner Kleinwort Wasserstein.

It currently employs 130 people around the UK and generated revenues of £26m and EBIT of £2.6m for the year ended March 2004. The Prime management team led by Matt Franklin will remain in place and will help to spearhead 2escape2's growth plans for its network services group.

Prime has provided a new network for 13 House of Fraser stores where all telephone calls and data are sent over the internet resulting in significant cost savings and improved reliability. The network is due to be rolled out across the remaining 34 House of Fraser stores. Halliburton, the US oil and gas company, has installed a similar system in its new Leatherhead offices.

The acquisition of the Newbury-headquartered Prime brings the total number of acquisitions made by 2escape2 to five since Gresham first invested £6.6m in July 2003. As a consequence of these acquisitions and strong core organic growth, 2escape2 is expected to generate revenues on an annualised basis of over £70m based on current business levels.

2escape2 was established in 2002 by chief executive Terry Burt, aged 47, and chief operating officer Mark McVeigh, aged 44. With Gresham's backing, 2escape2 has been able to execute a buy-and-build growth strategy creating a managed services provider that comprises a balanced portfolio of companies focused in the support, networking and managed services sector of the IT services market.

The management team brings an impressive track record to this venture. Through a combination of organic growth and a series of strategic acquisitions in 12 countries, they increased turnover at their previous IT services business, 4Front Technologies, from $11m in 1995 to $270m in 2000. 4Front was sold in the same year to NCR for $270m.

Gresham committed an additional £8m of funding to 2escape2 to help finance the acquisition. HSBC Bank also provided a further debt package of £10m to help fund the latest acquisition and, with Gresham, are committed to supporting 2escape2 in funding its buy and build strategy, with the aim of reaching turnover levels of £200m in the medium term.

Terry Burt commented, "We are delighted that Prime has joined our Group and we are very positive about the opportunities this generates, During the past three years, the hardest ever for the IT industry, Prime has consistently grown revenues and EBIT and has positioned itself as one of the country's leading IP technology convergence specialists. We welcome their management and staff to the Group and look forward to an exciting year ahead."

"2escape2's latest acquisition provides a superb opportunity for the cross selling of both technologies and services - we look forward to continued backing of this exceptional team as they grow the business," said investment director, Paul Canning, who sits on the 2escape2 board as a non-executive director for Gresham."

Paul Canning and Alastair Mills worked on the acquisitions for Gresham. Ian Crompton led the deal for HSBC bank. David Raff of DLA acted as 2escape2's legal adviser and Ian Paterson of Grant Thornton as its financial adviser and Adrian Dray of KPMG Reading advised the vendors.