Has there been a better time to raise scale up capital?

By Ian Waterfield
Partner, YFM Equity Partners

Has there been a better time to raise scale up capital?

YFM has completed growth capital investments into five young fast-growing businesses so far this year and a strong pipeline of opportunities reflects an increase in demand for scale up capital.

What is scale up capital?

Scale up capital, also known as later stage venture capital, is targeted at businesses with the following characteristics:

  • fast growing – the investment is being raised to accelerate existing growth which can be evidenced through clear KPIs.
  • differentiated product or service, often underpinned by its own IP
  • growing and loyal customer base – there are returning customers which have adopted the Company’s product or services. These are typically businesses which have achieved minimum revenues of £1-2m pa.
  • scalable business model – the core product or service has been designed to enable it to be rolled out or expanded without requiring significant further development, albeit there are likely to be opportunities to enhance and expand the offering.
  • ambitious management teams – teams that are not satisfied with the current rate of growth and can see the bigger opportunity and want to get there quicker.

Where can scale up capital be deployed?

Ambitious management teams are generally looking to increase market share in existing markets, access new markets and further develop their product or service offering.  The fresh capital is usually deployed to recruit additional people, expand sales and marketing activity levels or fund working capital.

Why is now the right time?

  • Alternative business models – the latest generation of technology-enabled businesses have easier access to their markets and are increasingly selling their services through recurring monthly revenue models, often under 2 to 5-year contracts. This allows young businesses to get to market quicker and show evidence of traction earlier, providing investors with an underpinning of value, when the Company might not yet be generating material profits.  As a result, companies can attract larger investments earlier in their development and scale quicker.
  • Strong investor appetite – the principle investors in this stage of company in the UK are Venture Capital Trusts. VCTs are regulated by the UK Government and the regulations have changed over the last few years to focus their investment activities on growth capital investments.  At the same time VCTs have raised significant further funds to invest in scale up opportunities.
  • Alignment of shareholders – this is key to the success of any ambitious company. Fast-growing businesses have often outgrown their existing shareholder structure, with early investors who are looking to exit and/or de-risk their current holdings.  Small-scale cash out alongside VCT growth capital transactions, can enable companies to set out on their next phase of growth with the equity in the right hands.
  • Professional support –corporate finance and legal advisors are eager to support fast-growing businesses, as they see deals being done and the potential to build long term relationships with ambitious management teams. This professional support can make the process of raising capital less disruptive, allowing the management team to focus on what they do best.

Recent scale up investments by YFM:

  • Matillion – based in the North West, Matillion is a leading provider of cloud-based integration technologies, helping companies optimise their data flows to and from the cloud. YFM originally invested £4m to accelerate revenue growth, in particular to support expansion into the US, and recently invested a further £1m alongside US investors in a $20m funding round.
  • Hutchinson Networks – based in Edinburgh, Hutchinson is a leading provider of IT and networks solutions. YFM invested £2.2m of growth capital earlier this year to enable the Company to recruit an additional 50 staff over the next two years.
  • NCam – based in London, NCam is a provider of augmented reality solutions to the entertainment industry. YFM invested growth capital earlier this year to support US expansion and continued technology development.

In each case, YFM introduced an experienced chairman with specifically relevant sector background into each of these businesses to work with the executive management teams.

Preparing for Selling your business

By Eamon Nolan
Partner, YFM Equity Partners

After all the years of hard work, blood, sweat and in all likelihood, a few tears, realising a strategic value on the sale of your business will make it all worthwhile.  Private equity partners work closely with their investee companies to ensure the best possible outcome for all the stakeholders in a business: the management team, employees, customers, suppliers and shareholders alike.

Some of the aspects that we at YFM Equity Partners have found to be crucial in maximising the return on investment include:

  • Identifying key value enhancers: establish early what the key things are that are likely to attract the most buyers and increase the achievable valuation. All key decisions should be about delivering these elements that may make all the difference between an acceptable outcome and one that knocks it out of the park.
  • Selecting a good corporate finance advisor: your private equity partners should always work with corporate finance advisors at exit to give the best chance of a good outcome. Key aspects in selecting who to work with to sell the business will include personal chemistry between the management team and members of the corporate finance team (important when the stress levels mount!), knowledge of your sector and potential buyers, international reach, lots of experience of doing deals in your marketplace (be it SME, mid-market or larger deals), etc.
  • Running the right strategy to maximise value for your company: in conjunction with your shareholders and Corporate Finance advisors, decide which strategy is likely to achieve the best outcome for your company: will it be marketing to a wide pool of potential buyers or targeting a more select group of buyers who you believe will be most excited and pay a premium price?
  • Uncoupling yourself from the company: succession planning is important to both give the new owner the confidence that there are the right people in place at the right levels of your business to provide continuity, as well as giving senior Board directors as much optionality as possible as to when they can depart the business.
  • Preparation: getting your housekeeping in order will add considerably to the ease of transacting the deal. Things to consider here are legal matters such as employee contracts, leases, etc as well as matters such as ensuring patent and IP documents are in place and up to date. On a personal level, the shareholders should ensure that good tax planning advice has been sought as early as possible in any transaction.
  • Timing: whilst there will of course be different drivers for exit, getting your timing right is key. Considerations here include the macro environment, where your company is in its growth story and factors specific to your industry.
  • Keep performing! A trade sale process will be one of the most time-consuming things the management team undertakes, particularly the CEO and CFO. It is therefore important that the senior teams ensure it has put in place the means for the business to continue to function and perform during this time – there’s nothing like a drop off in trading to spook a buyer.

I set out here some of the aspects to consider when the time comes to capitalise on all the hard work.  Since 2004, YFM has realised 35 investments and returned proceeds of over £100m to its core managed funds.

 

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Pushing geographic boundaries

…easier said than done…but worth it?

Charlie Robinson
Partner, YFM Equity Partners

Hunting out growth in a challenging economic environment is no mean feat.  For many of the businesses we are fortunate enough to work with at YFM, the answer may lie in extending the reach of their products and services into new locations, sounds easy right?  Open a new office, hire a load of people and off you go.

Of course, if it were as simple as that this would be a much shorter post.  For small companies looking to expand there are a multitude of pitfalls waiting to trap the unprepared, and while it is impossible to take all the risk out of a geographic expansion there are always ways to make things run a little smoother.  Here are three broadly sequential questions which I think are useful to consider when weighing up the pros and cons of opening in new locations:

  1. Do you really need to do it?  Ask yourself if you really need to open in a new location to achieve your business goals.  There may be more than enough to go for in your home market and it may be more important to focus on maximising that opportunity rather than take on the cost, effort and risk of extending into new markets.
  2. Can the business handle it?  Think carefully about whether you have the resources to manage operating out of multiple locations.  Finances will be key – new locations often take longer than expected to become self-sustaining, so it is essential the business can be funded through this period.  More importantly, especially in smaller high growth companies, it is crucial that there is sufficient bandwidth in the management team to deal with the challenges which will inevitably come.
  3. Who can help you out?  Don’t go in blind.  Ask your contacts and advisors who have been through the same process and if possible leverage their networks and experience so you don’t make the same mistakes they did.  Help is always out there…

The above commentary is deliberately a bit negative.  The point really is that it is key for business owners to really challenge themselves when considering geographic expansion.  The risk is high so the barriers should be set high.

At YFM we believe that if done right, the impact on a business can deliver transformational upside and so this is a major theme in much of our recent investment activity.  Portfolio companies Matillion, Ncam, Eikon and Springboard are all targeting expansion in the USA to exploit opportunities for their respective technologies.  Closer to home, Bristol-based food to go chain Friska is soon to open its third site in Manchester and passive fire protection consultant Checkmate based in West Yorkshire, has opened a new depot in the Midlands.  We are excited to be working with and supporting so many UK SMEs and teams that have made the decision to grow into new territories.

 

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YFM Equity Partners invests £4.5m to support the continued growth of CPMS Ltd

06 August 2018

YFM Equity Partners (YFM), the specialist private equity fund manager, has invested £4.5m from its managed funds into Collaborative Project Management Services (CPMS) to support the continued growth of the business through ongoing new product and market development.  YFM’s investment is the seventh investment from its £46m buyout fund.

CPMS provides multidiscipline Project Management to the railway system across track, signalling, telecoms, civils, and overhead lines.  CPMS has built a very strong reputation for excellence and is one of only seven companies to be awarded top marks under Network Rail’s Performance Supplier feedback process.  CPMS has grown quickly due it’s to reputation for efficient delivery and impressive levels of service.  Current annual revenues are almost £10m and the company employs 60 highly qualified members of staff.

The business was founded in 2012 by Matthew Baine, Damien Gent, Chris Mackie and Tim Galvini who will all remain with the company following the YFM investment and will continue to be the largest shareholders.  The team will be joined by Andrew Smith as Non-Executive Chairman, Andrew spent his executive career in large scale Infrastructure and Transport roles and has since become a serially successful Chairman.

Jamie Roberts, Partner at YFM, said: “Rail infrastructure is critical to the UK economy and CPMS is at the forefront of delivering the ongoing significant investment needed to keep up with demand.   The CPMS team has done a great job in building the business and we were very impressed with the reputation they have for delivering complex projects on time and under budget.  We look forward to working with the team as they move to the next stage of the company’s development”.

“This is the seventh investment from YFM’s 2016 buyout fund, which closed in April 2017, and represents another strong example of investing in well-established regional businesses in the £2-10 million investment market.”

Matthew Baine, MD and founder at CPMS, added: “We believe that our success is down to hard work, an honest and transparent ethos and the delivery of well thought out client solutions.  We met various private equity investors as part of this process and we felt YFM offered the right skill set to help deliver our growth objectives as well as sharing a similar culture.  We are looking forward to working with Andrew Smith and YFM to continue our growth story.”

 

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YFM Equity Partners backs the £10m MBO of DSP Database Managed Services

01 August 2018

YFM Equity Partners (“YFM”), the specialist private equity fund manager has backed the MBO of DSP Database Managed Services (“DSP”), a leading provider of database and data platform managed services.

Charlie Robinson and Ian Waterfield led the investment for YFM and this announcement marks the sixth investment from YFM’s Buyout Fund I.

One of the fastest growing implementation partners for Oracle Database Cloud, with a similar pedigree in Microsoft Azure, DSP is one of the UK’s leading suppliers of Data Platform support & consulting services, whether on-premise, in-the-cloud or hybrid.

DSP prides itself on having world-class Oracle and Microsoft delivery teams that deliver innovative support, consultancy and managed cloud services to a wide range of mid-market and FTSE 100 clients, particularly those with mission-critical database architectures.

DSP was founded in 1999 and set out to become a trusted technology partner for companies who wanted to invest in Oracle and SQL Server technologies.  Since those early days the Company has evolved as client requirements, and technology, has changed. DSP now supports multi-vendor, cloud and hybrid database and application infrastructures around the clock, wherever in the world they may be.

In recent years DSP has delivered significant contract, revenue and profit growth, and the experienced management team led by CEO, Simon Goodenough, is now looking to invest further in sales, operations and service innovation to accelerate growth across all areas of the business.  John Hawkins will join the business as non-executive Chairman.

Charlie Robinson, Partner at YFM said: “DSP is exactly the type of business that we look to invest in; it has an excellent reputation in this industry and has delivered consistent growth over the last few years.  Its focus on enabling its customers to get the right solution among a myriad of technology and vendor options provides a positive backdrop for the Company to further develop its customer base and expand its service offering.

“This is the sixth investment from YFM’s Buyout Fund, which closed in April 2017 investing in well-established UK businesses and supporting management teams in delivering their ambitious growth plans.”

Simon Goodenough, CEO at DSP said: “DSP is seeing unprecedented levels of demand for its services, especially from organisations that are beginning to realise the strategic value of hybrid private and public cloud data platforms.  We are delighted with both YFM’s investment and the expertise the team will provide.  We are looking forward to working closely with YFM to enable us to deliver our growth plans and reach the Company’s true potential.”

DSP was advised by Paul Morris at BDO and Gavin Cummings and Paul McCannah of Browne Jacobson.  Legal advice to YFM was provided by Chris Reed at Gateley, financial due diligence was carried out by Ed Gray and Iain Battigan of PKF Cooper Parry, commercial due diligence by Tom Fletcher and Anthony Crutchett of CIL, and organisational due diligence by Anna Cornwallis of Stratton HR.  Santander Growth Capital team, led by Scott Douglas, provided debt finance.

 

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Private Equity widens its appeal

Why high net worth and sophisticated investors are increasingly turning to Private Equity

Mike White
Partner, YFM Equity Partners

For decades institutional investors have been investing in Private Equity because of its attractive long-term performance of double digit returns, low correlation with quoted markets and resilience.  For example, as an asset class Private Equity has delivered average returns of 11.0%[1] over the last ten years, with the small buy-out segment being the best performing sector of the market.

Private Equity should not of course be confused with investments of the type made by “Dragons Den” or venture capital investors.  Whilst it’s true that both investment types are made into private companies, venture capital investments are made into early stage, normally pre-profit and often pre-revenue businesses.  Whilst these businesses have the potential for generating high returns, they also carry a commensurately high risk.  Instead, Private Equity investments are made into pre-existing, often long established companies, usually involving the buy-out of one or more shareholders e.g. the founder of the business wishes to retire and sell the company to his or her second tier management team.

Whilst, for many years, it hasn’t been unusual for institutional investors to allocate 5% or more of their assets to Private Equity, it is only relatively recently that high net worth and sophisticated private investors have been attracted to the asset class.  Just like the institutions they have been attracted to investing in Private Equity as a way of diversifying their portfolios and accessing the potential for strong returns, something particularly relevant in an era of very low interest rates.

I am particularly interested in a specific subset of the high net worth market, the entrepreneur.  Successful entrepreneurs are typically business savvy and highly driven individuals, with a clear vision of what they want to achieve.  But for most entrepreneurs there always comes a time to sell their company, whether it be when all their goals are achieved, they want to retire, or someone just offers them a price that’s too good to refuse.  So what happens next?  Taking a long holiday might come first.  But that’s the easy bit!  When the suntan has faded there is a real job of work to be done; how to invest the £50m, £100m or more they have realised, which is no small task – albeit there are plenty of advisers on hand to help.

Investment in property and a portfolio of stocks and bonds will no doubt form part of the solution.  But entrepreneurs will often also set aside a “play pot” for investing in small businesses, often taking 100% ownership and becoming actively involved as an angel investor.  The problem with this “direct” Private Equity approach is that once you have invested in a few businesses you can soon run out of bandwidth to manage these investments, and you end up with a relatively high concentration of funds invested in perhaps only 3-4 companies.  So I think there are some good reasons for entrepreneurs to invest in a Private Equity fund in addition to or in place of “direct” investing:

  • Diversification, with a typical Private Equity fund investing in 10-15 different businesses, across a broad range of sectors.
  • Access to a much wider level of deal flow than would otherwise be seen with fund managers often seeing dozens of opportunities for each investment chosen.
  • Professional management, with investments made and managed by a team with a demonstrable and consistent track record of making money in their chosen market.
  • Fund managers often offer investors access to co-investment opportunities, so they can “double up” on investments of particular interest.
  • No personal involvement required, but investors may have a role on the funds’ advisory panel.
  • The social value and personal satisfaction of helping put something back into growing British business

Private Equity has long been the preserve of the institutional investor, but the attractive returns Private Equity funds offer have put them firmly on the radar as alternative assets to be considered as part of any high net worth and sophisticated investor’s portfolio.

[1] Source: BVCA Private Equity and Venture Capital Performance Measurement Survey 2016 (10-year returns)

 

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YFM Equity Partners supports £3m investment into Arcus

23 May 2018

Funds advised and managed by YFM Equity Partners (“YFM”), the specialist private equity fund manager have backed a £3m investment into Arcus Global Limited (“Arcus”), a provider of cloud-based software solutions to local and national public sector organisations.

YFM’s investment comes from its two advised VCTs, British Smaller Companies VCT plc and British Smaller Companies VCT2 plc.

Founded in 2009 by Denis Kaminskiy (CEO) and Lars Malmqvist (CTO), Arcus has experienced rapid growth as a result of a shift towards cloud-based solutions for software and infrastructure requirements.  Arcus has developed a proprietary Software-as-a-Service (SaaS) platform that enables Local Authorities and other Public Sector organisations to transform end to end service delivery in areas such as Digital Transactions, Planning, Building Control, Regulatory Services and Waste Management.

Arcus is also a specialist Public Sector Advanced Consulting Partner for Amazon Web Services and provides unique cloud hosting and managed services to a number of public sector bodies, using their expertise to deliver solutions that are resilient, secure, and cost effective. In the public sector space, the company is using the latest AWS services such as AI and Alexa Skills.

Arcus is based in Cambridge, where it employs over 100 staff, and expects to generate revenue in excess of £13m this year. Their client base includes over 30 UK Local Authorities such as Eastleigh Borough Council, Mid-Sussex District Council and Aylesbury Vale District Council. The infrastructure team serves over 100 Public and Private Sector clients, including Central Government, Universities and large businesses.

YFM’s funds will be used to support the continued growth of the business, building resource in technology development, sales and customer services. Together, this will enable Arcus to further expand its range of software solutions to help the public sector to increase its use of digital technologies and transform services.

Charlie Robinson and Andy Thomas led the investment for YFM. Charlie Robinson commented:

“Denis and his team have done a fantastic job in building the company and we are delighted to be working with Arcus to support their continued growth over the coming years. They have developed an enviable reputation for their innovative approach and we believe their solutions will fulfil an important role in helping public sector organisations drive efficiencies and to adapt to the changing digital landscape”

Denis Kaminskiy, co-founder of Arcus, added:

“I am incredibly pleased do have raised this growth investment from YFM. We ran a thorough and competitive process, and they have been a joy to work with so far. Of course, our exciting journey is just beginning, and I am looking forward to YFM’s expertise, advice and support. Our customers desperately need help, and this funding will allow us to improve and accelerate every part of our business.”

YFM’s legal advice was provided by Chris Reed at Gateley plc, Commercial Due Diligence by Matt McNally of Armstrong TS, and Organisational Review by Anna Cornwallis of Stratton HR.

Marc Shaw (RPL Mergers) acted as financial advisors to Arcus, and Allison Keyse of Mischon de Reya provided legal advice.

 

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Hutchinson Networks in global growth drive following YFM backing

30 April 2018

Fast-growing Edinburgh technology business to create 50 technology jobs

Hutchinson Networks, an Edinburgh-based global technology business, has received a £2.2m growth capital investment from funds advised by YFM Equity Partners (“YFM”), the private equity fund manager.

Hutchinson Networks Limited is a leading provider of multi-vendor IT and network solutions to national and international clients offering advanced infrastructure services to a rapidly expanding client base, including a major UK airport, an international consumer brand, several Fortune 100 companies and a global retail technology brand.

Hutchinson Networks employs 89 staff across the UK and a network of professionals across the globe.  The business is projecting turnover of £11.5m this year, rising to £16.5m in 2019.  The investment from YFM advised funds will enable the company to recruit an additional 50 technology staff during the next two years.

Founded in 2011 by Paul Hutchinson (CEO) and Stephen Heslop (COO), Hutchinson Networks has experienced significant revenue and profit growth in recent years.  The management team, including CTO Stephen Hampton, were seeking growth capital to fund additional marketing and operational resources to accelerate international growth.

Nigel Owens, Investment Director at YFM responsible for the Scottish market said: “Hutchinson Networks has an outstanding reputation with its clients and its technology partners.  The company has grown strongly due to the drive and energy of the management team. The plans for the business to scale both sales and employment whilst expanding their geographic footprint in a growing market fits perfectly into the portfolio of businesses in which we are investing.”

Stephen Heslop, Hutchinson Networks’ Chief Operating Officer said: “The general move to cloud-based services across all industries continues to drive exceptional growth opportunities for us.  We are very pleased to have YFM as investors; we liked the straightforward approach and their experience of supporting growing businesses. We will now focus on delivering our transformative technologies and expertise to clients in the UK and globally”.

Hutchinson Networks was advised by Paul Mason and Jonathan Griffiths of Chiene+Tait LLP and Stuart Hendry of MBM Commercial. Legal advice to YFM was provided by Murray Jack and Cristin Craig of Addleshaw Goddard LLP, financial due diligence was carried out by Johnston Carmichael, commercial due diligence by Philip Carse of Megabuyte and organisational due diligence by Anna Cornwallis of Stratton HR.

 

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YFM Equity Partners supports an investment into EIKON, a leading end-to-end digital post-production services provider

09 April 2018

Funds advised and managed by YFM Equity Partners (“YFM”), the specialist private equity fund manager have backed an investment into Eikon Group Limited, a cutting edge, end-to-end, digital post-production services for the motion picture and broadcast industry.

YFM’s investment comes from its two advised VCTs, British Smaller Companies VCT plc and British Smaller Companies VCT2 plc alongside the YFM Equity Partners 2015 Co-Investment LP.

EIKON Group Ltd was founded in 2014 by Peter Wright (CEO), Richard Fish (Commercial Director), Rick Corne (Innovations Director), Jon Gardner (Operations Director) and Russell Wetherell (Creative Director).

EIKON Group have cutting edge technology facilities in Soho, London and Burbank, Los Angeles, offering digital mastering and localisation to the film, broadcast and online media industry. Clients include Paramount Pictures, Twentieth Century Fox, Sony Pictures Entertainment, Warner Bros, Universal Pictures, CBS and Netflix.

Now in their fifth year, EIKON have doubled revenues year on year and have grown from a staff of 6 to 100. Having recently finalised a lease on a new 20,000 square foot building in Los Angeles, growth is expected to continue at the same rate as the company develop current core business revenues and extend service offerings within the entertainment industry.

EIKON have developed world leading systems and workflows across multiple entertainment service lines in the entertainment industry. They oversee the mastering and localisation of major studios worldwide feature film releases to cinema, trailer campaigns and original content releases in other media for worldwide audiences.

EIKON CMS is a campaign management system to manage, localise, distribute and debut feature film trailers and marketing material for feature film marketing campaigns cross cinema, online and broadcast platforms. CMS allows for the worldwide debut of marketing content across all worldwide territories simultaneously on the world clock across platforms such as Facebook, YouTube and other platforms.

EIKON META system manages and facilitates the translation and subtitle delivery of feature film and episodic content in order to provide localised content around the world. It has added functionality of viewing and approval mechanisms for localised graphics and censor edits in order to expedite the entire release of any given content simultaneously.

Recent EIKON work includes the worldwide localisation and mastering for titles “Peter Rabbit”, “Greatest Showman”, “Shape of Water”, “Three Billboards Outside Ebbing, Missouri”, “A Quiet Place”, ‘Red Sparrow”.

YFM’s funds will be used to support the expansion into the US where a new state of the art studio will be built in Burbank, Los Angeles as well as continued investment in the development of technology to enhance the service delivery to customers.

Colin Granger led the investment for YFM and will join the Board at completion.

Colin Granger, Partner at YFM, commented:

We are delighted to be working with Eikon and the management team to support the future expansion into the US and the continued investment in underlying software development. Management have done a fantastic job in growing the business to where it is today and we look forward to supporting them in the next chapter of growth.

Market drivers in the technology enabled media sector continue to be exceptionally strong with increasing levels of content being produced and content producers targeting more global audiences, two trends which we believe Eikon will benefit significantly from.”

Peter Wright, Co-Founder and CEO of Eikon, added:

We are very excited about the future and growing the business alongside YFM. Their history of helping businesses grow to the next level attracted us to them as well as their straightforward approach.”

YFM’s legal advice was provided by Simon Jones of Osborne Clarke, Commercial Due Diligence by Geoff Rampton of RPL and Financial Due Diligence by Rebecca Guerin and Maya Panova of RSM.

Dane Phillips (NOR Capital) and Andy Coghlan and Daniel Jonas (both WK Corporate Finance) acted as financial advisers to Eikon with support from Robert Taylor at 360 Law Services. AIB (John Tobin and Matthew Jennings) provided the senior debt on the transaction.

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Choosing a private equity investor

Steve Harrison
Portfolio Director, YFM Equity Partners

Taking on private equity investment can have a transformational impact on your business, not only in terms of the funding provided but also through the value an investor can add through their input.  PE investors should be experts in business growth and transformation.   They will have experience of what growth strategies work, pitfalls to avoid, they will have networks to call on should you need additional help and as professional purchasers of businesses themselves they are skilled in grooming or developing businesses to make them attractive for sale which will help in ultimately realising value for all shareholders.

However, the decision by any business owner or entrepreneur to bring in an external investor is not to be taken lightly.  The relationship with your new investor will be one of the most important for your business so it is important to choose the right partner.  Obviously, the financial terms of any deal are important, how much funding, the equity stake and on what terms etc.  This is often the key focus at the time of the deal, however there are many more non-financial considerations to bear in mind to ensure you choose the right partner and these are at least if not more important than the detailed financial and legal terms themselves.

Chemistry

You’ll be spending a fair amount of time with your investor over several years.  Can you see yourself developing a successful relationship with the individuals involved?  Do you trust them? Are they straight talking? Do they share your values? Do you know who you will be dealing with post-investment?  Do you think you will enjoy working with them – will it be fun even?

Experience and track record 

An investor usually needs to be able to offer more than just capital.  They will undoubtedly do their due diligence on you and your business, it is important you should do your homework on them.  How long have they been investing?  Is their funding committed and readily available or will they need to raise it which is riskier? Are they able to provide further financial support if needed and do they have the appetite to do this? What is their track record of success and how in particular can they add value to your business over and above the capital they will be providing?  These are all important questions and it is wise to seek references from your investor as part of this process.

Approach

Private equity investors come in many shapes and sizes and all have different approaches to managing their investments.  Some like to take control and will be interventionist, others will be hands-off and distant and many will be somewhere in between.  Some are sector specialists others are generalists. These different approaches all have their benefits and disadvantages.  Be sure to understand your investor’s modus operandi and assess whether it suits your requirements.  Do they share your enthusiasm for your business?  Do they have an office local to you which will make them more accessible?  Will they be engaged, devoting the time you feel appropriate for your business? An important question to consider is how your investor will react to the inevitable set-backs and challenges along the way? Will they be supportive in such circumstances or nervous and overreact?

Objectives

Ensuring you are on the same page as your investor from the outset is crucial and whether they have the necessary flexibility should circumstances change. Do your prospective investor’s objectives align with yours? Do they buy in to and support your plans? Do you share the same objectives in relation to a future sale or exit and are you agreed on the timescales involved?  This latter point is particularly important.  Does the investor back your plan, or is there a risk they will be holding you back or push you to expand more aggressively than you feel comfortable with or looking for the door before you wish to exit?

In summary if you address the above questions and find the right partner then working with a private equity investor can have a transformational effect on your business, providing vital access to capital for investment, and additional skills experience and input to help you and your business grow, prosper, create jobs, access new markets and ultimately enhance value for all stakeholders.

 

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YFM Equity Partners-backed Cloud Data Specialist Matillion Raises $20m

22 March 2018

Existing investor YFM Equity Partners provided additional funds alongside new investors Sapphire Ventures and Scale Ventures Partners to fund an accelerated growth and product development programme

Matillion, the makers of cloud data integration tools Matillion ETL for Amazon Redshift, Matillion ETL for Snowflake and Matillion ETL for Google BigQuery, today announced it has closed a $20 million Series B round of funding led by Sapphire Ventures, existing investor Funds advised and managed by YFM Equity Partners (“YFM”), the specialist UK-based private equity fund manager and new investor Scale Venture Partners. The funding will accelerate the Company’s leadership in the cloud data integration category.

The company, based in Altrincham, (Manchester, UK) and Manhattan (New York, US), was founded by Matthew Scullion in 2011, alongside Chief Technology Officer Ed Thompson and Commercial Director Peter McCord. Matillion has developed leading-edge software focused on allowing its customers to extract, load and transform data into and on cloud-based data warehouses, quickly and at scale.

Having raised Series A funding from YFM in November 2016, in the last 12 months the Company has seen significant commercial traction with annual recurring revenue of growth over 260%. Matillion’s software is used by more than 250 customers across 30 countries, including global corporates, such as GE, Siemens, Citrix and Accenture, as well as high growth, data-centric companies like Vistaprint, Zapier, DocuSign and Upside Travel.

Today’s funding will be used to expand sales, marketing, partnerships and research and development (R&D) to meet increasing demand and further accelerate development of the Matillion ETL product line. The round brings the Company’s total funding to over $26 million. In addition, Angela Warner, Portfolio Director at YFM, Andreas Weiskam, managing director, Sapphire Ventures and Andy Vitus, partner, Scale Ventures Partners, will join the Board of Directors.

Commenting on this new investment round, Angela Warner said: “Matillion has demonstrated outstanding growth in the period since YFM invested. The interest and enthusiasm shown in the fundraising process is testament to the quality of the product, the team and the opportunity to scale globally. This new investment round will enable the Company to invest in and expand the technical team in Altrincham, to support the continued product development and global expansion as companies of all sizes need the tools Matillion provides to swiftly & efficiently manage their data and drive their businesses forward. We look forward to continuing to work with the team and our new investment partners through the next phase of this exciting journey.

In addition we are delighted that this deal represents the third such investment backed by YFM Equity Partners during March, following on from the MBO of Checkmate Fire Solutions Ltd and Ncam Technologies Limited.”

 

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