Theta acquisition pushes NZ Inc

Published on the 14/02/2019 | Written by Heather Wright

Theta acquires Designertech

Theta Digital adds .NET & infrastructure to strengthen company’s analytics play…

Kiwi tech consultancy Theta has acquired Auckland’s Designertech in a deal which will significantly bolster Theta’s digital and infrastructure business, and strengthen its NZ-first credentials.

The deal, for an undisclosed sum, sees around 35 Designertech staff joining Theta, growing the company’s overall staff numbers to 275 and putting it on track to be a $50 million company by the end of 2020.

Rob Lee, Theta CEO, today told iStart Designertech brings some new and expanded skills to Theta, particularly around Microsoft .NET development and infrastructure.

“If we are big and have enough skill so people and big organisations can turn to us, rather than overseas companies, that sits really well.” 

The joining of the two Kiwi owned Microsoft Gold partners will see the Theta Digital team significantly bolstered by Designertech’s .NET developers, growing to almost rival Theta’s 70-strong analytics team, which has previously been the largest part of Theta’s business. Around 20 previously Designertech members will join the Digital team, growing it to 60-65 staff.

“So they are two big, big parts of the business, and then we’ve got the Theta ERP (Microsoft Dynamics 365 Business Central, previously Dynamics NAV) business,” Lee says.

“With the two companies we have greater ability with the critical mass to provide that whole broad range to the market.”

Around 35 staff from Designertech move across to Theta, including 15 on the project delivery and infrastructure sides, as well as several auxiliary staff.

“We have taken everyone we can get our hands on, because they’re the same as the people in Theta – they’re highly competent, skilled people, same attitude, same culture, same outlook,” he says.

Ray Delany, Designertech CEO, will join Theta as the integration manager for the next three months, with Lee hoping Delany will take on a new role with the company following that.

“He’s so respected by customers. He’s got some skills as an ex-CIO which potentially could help us with digital transformation and strategic consulting, and I think it’s quite possible he could move into that sort of role,” Lee says.

For Theta – and for Lee personally – that’s a crucial element. The company, which has snapped up four companies in eight years, has a longstanding strategy to expand by acquisition in order to help grow top line revenue.

“It makes us more attractive in the market – a safer and more resilient company to do business with. It gives us more credibility and broadens the skills we have.”

But Lee says there’s another, more personal motivation. “If you’re going to have a bunch of people working for you you have responsibilities to them, including providing continuing employment.

“Making sure you’ve got the mass and reputation helps us gain added resilience.

“It’s very important that we carry on growing and building more capability so we become more resilient and it’s better for everybody: Our customers, our staff and better for the shareholders as well.”

On the customer front, the deal will see Kiwi logistics and transport company Mainfreight – a key Designertech client since 1994 – join Theta’s customer base which include Auckland Transport, the University of Auckland, The Warehouse, Zespri, Fulton Hogan, Z Energy, Genesis and a wide range of government departments.

“We acquire an iconic New Zealand brand in Mainfreight,” Lee says. “And that customer is significant. It becomes one of our big ones.”

Lee, who personally carried out due diligence with Designertech customers, says the customers are ‘very happy with the service they have got’. “What the customers have said though is that they believe in the most part that there is the opportunity to use Theta’s broader capabilities – analytics for example.”

Lee says the acquisition will also help Theta with a soft objective of being part of NZ Inc: A New Zealand owned company delivering solutions to other Kiwi companies ‘to make them great either in the country or on the world stage’,” Lee says.

“We like the idea of NZ Inc. If we are big enough and have enough skill so people – especially government departments and big organisations – can turn to us as a New Zealand company, rather than some of the overseas companies with big reputations, that sits really, really well with us. That we’re doing something for New Zealand.”

Lee says the deal is an example of what Microsoft has been able to achieve by becoming ubiquitous, and that is driving acquisitions among the vendor’s partner base.

“There’s a great market need for Microsoft technologies and we’re part of that movement.

“We work with a lot of different technologies, but Microsoft is the strategic partner.”

Phil Goldie, Microsoft New Zealand’s Partner Director, says “It’s great to see these two strong and successful partners come together. Both are already well known for delivering great projects for their customers, and this is reflected in awards won and in their gold partner status. Together, working at an even bigger scale, we can’t wait to see what they achieve.”

Delany says “We’ve known and respected Theta in the market for years. It’s been great to discover how much we have in common and how much stronger we can be together. Our people share a passion for helping our customers to prosper and grow. Having competed against each other to raise money for leading charity Cure Kids, we’re looking forward to competing on the same team.

As for future acquisitions, Lee says this won’t be the last.

“This is our fourth significant acquisition in eight years. This is the biggest of the acquisitions we’ve made, but that’s fair enough because we are a bigger company now and can take on a bigger acquisition.

“For the next several months we will be totally focused on getting Designertech integrated into Theta.

“Might we acquire again within the year?, yes, we might, but it will have to be something that looks really attractive.

“But you can expect to see us doing more expansion by acquisition.”

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