Outsourced IT and communications supplier Adept Telecom (ADT:AIM) has secured the £12m acquisition of IT managed services supplier Atomwide, its biggest to date.

This looks like a smart bit of business that will substantially bolster revenue and profit. It should strengthen its recurring revenue managed services income stream. The deal also brings cross selling opportunities to 4,000 schools and circa 2m end-users.

Buying Atomwide could be the first of several increasingly large acquisitions by Adept as it tries to carve a place in the IT and communications solutions supply market for small to medium-sized enterprises.

We previously flagged the near-£80m company’s emerging ambition in February 2017, when Adept negotiated a new line of credit with banks worth £30m, twice the size of its previous borrowing cap.

With £7.3m of the Atomwide funding provided by the Business Growth Fund in return for convertible loan stock (at 393p per share), Adept still has plenty of financial firepower.

‘We estimate that the acquisition will increase Adept’s full year 2018 earnings before interest, tax, depreciation and amortisation by 15% to £9.6m, and in 2019 by 22% to £10.5m,’ calculate analysts at Northland Capital.

That implies a 4% and 9% increase in earnings per share estimates this financial year (to 31 March 2018) and next respectively, putting the stock on a forward price to earnings multiple of 12.5, falling to 11.6, based on a 322.5p share price.

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