After 27 years in business, well-known reseller Dataflex has called in the administrators after a deal to sell to a global giant fell at the final hurdle.
The company, which was founded in 1987, appointed administrator Frank Lo Pilato of RSM Bird Cameron Partners on 25 February, following some difficult years for Dataflex.
Dataflex has its head office in ACT and sites in Sydney, Melbourne and Brisbane. It generated around $35 million in sales and has 38 staff.
It had been negotiating a sale to Indian outsourcing behemoth Tech Mahindra, which seemingly fell through at the last minute, according to Dataflex chief executive and founder Brian Evans.
CRN briefly spoke to Evans yesterday. He referred us to the administrators, adding that anyone interested in investing should contact RSM Bird Cameron Partners.
"There has been some interest already; it is a bloody good company," said Evans yesterday.
Frank Lo Pilato said: "In the last 48 hours, we have been assessing the situation, looking for potential buyers and trying to keep the business at basic.
"We have had to put off some staff to reduce overheads. We have key staff there. They are in a holding pattern while we try to establish if there are people interested in buying the business.
"Following the decision by Tech Mahindra to pull out, Brian made the decision to look for the next steps to keep the company alive," added Lo Pilato, adding that Dataflex would make a good acquisition opportunity.
Over recent weeks, Evans had spoken to CRN about the impending deal with $2.6 billion-turnover Indian-owned outsourcing giant Tech Mahindra.
Just weeks ago, it seemed as if the sale was a done deal. It would have saved Dataflex from its difficult financial position.
Speaking to CRN last month, Evans said the company's problems stemmed back to 2008, when Dataflex "won" a tender for a Sydney client that turned out to be a fraud. Evans said Dataflex lost $850,000 in the deal, and has struggled to right the ship ever since.
Evans revealed that he had been speaking to Tech Mahindra on and off for the past two years. The deal would have provided the best option to protect Dataflex's staff and creditors, he added.
He said his priority had been "striking a deal under which all creditors are paid, then hit the reset button with new capabilities".
"I wanted to be able provide a future for the talented people who work with me as well as ensure my creditors are paid out," Evans told CRN in January.
He had expected that the acquisition would give Tech Mahindra a major foothold in the Australian capital.
Dataflex is a key IT supplier to the Federal government. "We supply to just about all government department in one way or another; 95 percent of our business is government," said Evans.
The size of the company's debts is unclear, however, it seems likely the fallout will be in excess of hundreds of thousands of dollars.
Tech Mahindra has never responded to CRN's attempts to make contact over the deal. Yesterday, a spokesperson told us: "The company will not be interested in commenting on market speculations."
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