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UK-based mid-market private equity firm, Lyceum Capital, has led a £50m MBO for Essex-based mid-market ERP software firm, Access UK. Lyceum will install industry veteran (though he prefers the term ‘seasoned campaigner’!), Gareth Denley (ex-Rebus HR, ex-IBM, ex-Spring) as non-exec chairman, and David England (ex-Computer Software Group, ex-Solution 6, ex-Tyco) as NED (in addition to a couple of their own people), to support Access CEO Chris Bayne. Bayne came on board in 2008 as a result of Access’ acquisition of channel partner, Armstrong. The Lyceum deal buys out founder Alistair O’Reilly; management and other shareholders hold a goodly chunk of the equity. Our good friends at Regent advised Access on the deal.
Access turns over some £28m p.a. at an EBITDA of £5.5m, so we’re talking about a valuation of 1.8x sales and 9.1x EBITDA (historic). Compare this to COA Solutions, the ex-Alchemy company acquired by Vin Murria’s ‘healthcare plus’ buy-and-build vehicle, Advanced Computer Software (see Murria’s ACS snaps up Alchemy’s COA). Murria paid £100m cash for COA, which appeared to be on a c.£60m revenue run rate and near-£13m EBITDA. Looks like COA wasn’t that expensive after all!
I’ve just spoken to Denley. Since moving on from Rebus HR, he has taken non-exec chairmanships at Oracle support services firm, Quantix (see Quantix riding high in the cloud) and vertical specialist software firm, Integrity Software (“big in hair and beauty”). Denley told me that with the Lyceum cash injection, more M&A is on the agenda - I am sure he would like to see Access catch up with archrival COA. What an interesting space the mid-market software is turning out to be!
I will be meeting Denley again (it’s been a long time …) to get his perspective on the trials and tribulations of taking on non-exec chairs at PE-led software firms. TechMarketView Foundation Services subscription clients will be able to read all about it in a future edition of IndustryViews Private Equity.
