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Contents

Sector Overview
Buyers Sentiments
Private Equity firms continue to participate
Non-traditional acquirors buy digital
Acquirors worth watching
Our recent transactions
Rockworth round-up

Sector Overview

Our view of the market in one word – buoyant.

We hear a lot of doom and gloom about the British economy and its prospects, but we do not find these fears borne out when it comes to mergers and acquisitions.

In the broad and evolving IT sectors, there is increasing demand for acquisitions where a clear strategic value can be identified, as illustrated in the companies here. Back to top

Buyers’ M&A sentiments

Our research indicates a wide appetite for direct acquisitions by established firms in these markets.  Advanced (prev. Advanced 365) has announced a pro-active search according to their CFO Andrew Hicks, underlining their commitment to growth following their April acquisition of software solutions provider Kirona, a deal that generated a 3.1x return for exiting private equity house Livingbridge.

Our discussions with the likes of Civica, Liberata, Cognizant and Idox further validate this broader acquisitional interest where a clear value proposition can be delivered. Back to top

Private Equity firms continue to participate

May saw Hive HR (Newcastle based employee engagement SaaS publisher) secure a £1.2m investment package, led by Private Equity firm Maven. The funding will enable Hive to continue an investment programme in sales and marketing, as well as roll out product development and enhancements to their clients.

Silverfleet Capital has backed the management team of Microgen Financial Systems (business critical software developer) in a buy-out from Aptitude Software for a reported multiple of 2.8x revenue, positioned to complete in late June. Silverfleet are proponents of the ‘buy and build’, or ‘land and expand’ strategy, helping their portfolio companies achieve accelerated growth through clear focus on management support and bolt-on acquisitions.

In short, businesses showing solid growth and backed by a committed management team to drive their strategy forward will find Private Equity firms keen to invest their ever-increasing reserves into this sector. Back to top

Non-traditional acquirors buy digital

We’ve seen JustEat acquire Practi (provider of tablet based Point-of-Sale and restaurant management systems) in April and large consultancy firms such as Accenture continue to make specific digital acquisitions for highly strategic reasons. Frequently these buys are made to entrench or gain a competitive advantage through rapid access to software and IT solutions skills. Back to top

Acquirors worth watching

Allocate Software (workforce-management Software-as-a-Service provider) announced in May that they are actively looking for acquisitions to “gain cross selling opportunities and expand our geographic reach” according to CEO Nick Wilson. Management will focus initially on UK-based transactions, although it could also make moves in Germany and the US in an unspecified timeframe, Wilson said.

In May, listed Nasstar (Managed IT Specialists) CEO Nigel Redwood announced that, after a period of inactivity since 2016 to focus on integration of previous acquisitions, they are alert to opportunities and expect to be ready to start a new process of acquisitions by the end of the year. When assessing opportunities, Nasstar have stated that they are willing to consider factors including a target’s annual recurring revenue rate and market expertise, rather than its size.

John Cotterell, CEO of Endava (Tech. solutions and services) stated “M&A is very much part of our thinking”. After the successful integration of their Velocity Partners acquisition, they are on the look out for smaller ‘tuck-in’ acquisitions that add new capabilities within a sector, domain, geography or technology. He added that Brexit was unlikely to have any impact on the business: “demand for our services remains strong, and our pipeline is full in all geographies and verticals”.

Such positive statements by industry figures at the cutting edge of the industry give weight to our belief that there is continued demand for well-run businesses.  If anything, the challenge is distilling the market down from ‘interested in acquisitions’ to ‘seeing a clear strategic fit, appreciating the potential value-add of the transaction and willing to price it competitively’. Back to top

Our recent transactions

Sale of i2N to Northgate Public Services – i2N is a specialist supplier of SaaS systems into the Public Sector, with a particular focus on Justice, Prisons & Probation. They were acquired by Northgate, a subsidiary of the market leader Japanese IT solutions company NEC Corporation.

Stephen Callaghan, chief executive officer of Northgate, said, “We see a good synergy between NPS and i2N. This acquisition will boost our offer in the important justice sector whilst providing a strong opportunity for growth for i2N.”

 Jim O’Connor, CEO of i2N said, “We were concerned to find the right partner and, if a match was not available, to continue to expand within our specialist government sector. Our priority was exhaustive but discreet research to find the right potential acquirer, with the synergies to complement and enhance the i2N offering. Joining the Northgate team opens up new and exciting markets for both businesses in the development of critical software that spans the entire justice sector.”

Sale of Porge to Trufin PLC – Porge provides sophisticated software platforms to supply public-sector market insight research and data services, analysing millions of public sector invoices per month to build detailed models of public sector purchasing patterns. TruFIn PLC is an AIM listed company focused on growing Fintech and banking businesses to provide niche lending, technological and service solutions to the working capital and early payment markets.

Ben Jackson, Chief Executive of Oxygen Finance Group Limited said: “We have long been an admirer of the Porge business and the additional product offerings that we can provide to our clients is meaningful. We are delighted to have had the opportunity to make this strategic acquisition.”

Alice Watson, Founder of Porge said, “Selling a business that you’ve founded, managed and grown for nearly 20 years is never going to be easy, and I would urge anyone embarking on such an epic task to secure professional help. Rockworth provided the support, experience and the technical knowledge that we needed to secure a successful sale.”

Sale of TeamSeer to Access Group – TeamSeer is an award-winning SaaS based staff planning and team management solution for SMEs and Blue Chips. The Access Group is one of the UK’s leading providers of software and solutions to mid-market business.

Chris Bayne, CEO for Access, commented, “TeamSeer provides a significant step change for SMEs moving away from paper-based and Microsoft Excel systems or for blue chip clients integrating to large-scale vendors such as SAP or Oracle. It is the perfect addition to our software portfolio and TeamSeer has demonstrated strong growth with plenty of future potential.“ Back to top

Rockworth round-up

Our experience shows us that successful transactions with acquirors such as Northgate, TruFin and Access are the result of exhaustive market research processes, numerous in-depth (but anonymous) conversations with C-suite figures, multiple discreet meetings with potential acquirors and a truly competitive bidding process.  This will always help to ensure the best strategic fit for the business and a reflective value and offer structure.

Naturally if businesses go out to market unprepared, taking an ‘estate agent’ approach to investment without a clear understanding of the specific synergy value that can be realised with each of the companies to whom they are speaking – they are unlikely to attract the widest, best and highest-paying pool of potential investors or acquirors. The problem isn’t one of appetite in the market; if there is a problem, it is one of presentation and preparation.

Realising growth & maximising value

Rockworth works with private companies providing lead advisory business sale and transaction services and long-term exit-planning and strategic growth.

We use uniquely confidential methods, combined with creativity and hard evidence, to create a choice of options for our clients.  We always focus the market down to serious interest before even revealing the existence of a client, let alone a client’s identity.

We guide our clients, with rigorous attention to detail, throughout the negotiation and due diligence process until the deal is completed.  Our approach is open and collaborative, keeping clients in full control of the transaction.

What our clients say

  • QuestGates is a complex business and we had very set ideas of what we wanted to achieve. Rockworth were patient and supportive throughout and were always available to support and help, challenging where need be but always looking for solutions not problems. We could not have achieved the investment that we wanted without their advice.
    Chris Hall
    CEO, QuestGates
  • Thank you all for your excellent and urgent support in finalising our deal.  I appreciate that it was all rather late in the process - but you never flinched once. Your ability to get up to speed so quickly and provide great intervention and solid guidance is a credit to your professionalism. I was particularly impressed with your patience in providing expert help at a time when our stress levels were running high.
    Stewart Hollington
    Director, Analytical Services International
  • Time and time again as we went through the process, I was relieved that we had Rockworth at our side. They have excellent contacts and were able to unearth a wide range of suitors for the business.
    Neil Cameron
    Co-founder, CHL Software
  • The relationship we have built with Rockworth over the last five years helped to lay the foundations of a smooth and successful transaction. Selling a company I have built up over the last 20 years comes with some mixed emotions. It has been quite a journey. But I am delighted with the outcome that Rockworth helped to achieve, and I am looking forward to seeing the business continue to thrive under new ownership.
    Dr Donald Gibb
    Founder, The Birth Company
  • Thank you for your hard work and trustworthy advice on this deal - your focus and patience have been incredible. I've been hugely impressed at all stages on how you've guided me through this process, and how you've kept cool heads when it must have been very challenging to do so. Extremely happy to recommend Rockworth.
    Andy Crysell
    Founder & CEO, Crowd DNA
  • Thank you everyone at Rockworth for your guidance, advice and pragmatism during what has been a very quick turnaround. It has been a pleasure.
    Andy Whittard
    Managing Director, Cherwell Laboratories Limited
  • Rockworth provided the support, experience and the technical knowledge that we needed to secure a successful sale.  Lawrence and his colleagues are all high calibre individuals, and I would certainly recommend them.
    Alice Watson
    Founder, Porge Research
  • During the whole process the team at Rockworth was always available to answer questions, no matter how banal, and held our hand throughout. I can honestly say that without the Rockworth calm hand on the tiller I am not sure we would have got through it in such an easy manner.  
    David Bilton
    Director, CadCam Technologies Limited
  • We chose to work with Rockworth on the basis of their approach, networks and reputation. Lawrence and his team provided excellent support throughout the entire sale process and enabled the company to achieve an outstanding result. Whilst there was a great deal of complexity at times, it was managed with great care and my colleagues and I enjoyed working together with the Rockworth team throughout. I would have no hesitation in using Rockworth for future transactions and would recommend them very highly to others.
    Martin Lucas
    MD, Kittiwake Developments Ltd
  • I would like to thank you and the team for the major contribution you made to the sale of Cromptons Healthcare. It turned out to be a very complicated deal and I have to say I was staggered by the commitment and effort that was required from us all. I was impressed by both the professionalism and the support that Rockworth provided, which proved to be absolutely essential to me. I had not fully appreciated beforehand just how necessary that support would be.
    Martin Calhoun
    Owner, Cromptons Healthcare Ltd
  • Lawrence, many thanks to you and the members of the Rockworth team for achieving such a great result. It is the best possible outcome we could have achieved, both for ourselves as shareholders, and for our staff, ensuring not just the continuation of the company but positioning it for further growth. We were very pleasantly surprised at the range of potential acquirers that you introduced us to - we had no idea initially of the types of acquirer that you would manage to find from outside our direct industry.
    David Black
    Managing Director, Young Black IS Ltd
  • Rockworth was the ideal guide and partner in our search for a buyer for our company. Their process, insight and people skills were the perfect antidote for our inexperience and were a major factor in achieving the smooth path to our desired outcome. From the start their approach suited our needs as a privately owned company with limited resources to run the business and undertake a transaction. They were invaluable in helping us understand what was needed and what we might reasonably expect. I cannot recommend them highly enough.
    Tim Champion
    Managing Director, H.Squared Electronics Limited
  • From initial preparatory work and advice through the deal process and to final completion, we found your work to be invaluable. I was particularly impressed with the careful and thorough management of the due diligence process: the consistency and detail-oriented manner in which this work was carried out was much appreciated and ensured that the deal completed smoothly, even accounting for the different languages and countries involved.
    Fabio Antoniazzi
    Founder, La Credenza Ltd
  • As a family-owned business, it was extremely important to us that we had an advisor who took care and paid attention to the detail of our business. Lawrence and his team demonstrated real commitment to the deal, both in researching appropriate potential acquirers and following this through in a diligent and extremely supportive manner. I know that without Lawrence and his team we wouldn’t have achieved the successful outcome that we did.
    Rachel Bush
    Owner, Bush & Company Rehabilitation Ltd

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