Access pulls off £50m MBO
Essex-based business software combine Access has completed a £50m management buyout with backing from private equity group Lyceum Capital.
In what insiders are calling a management buyout, Access directors led by chief executive Chris Bayne have joined forces with Lyceum to acquire the shares of Access founder Alistair O’Reilly and other directors. The new funds will be used to “execute a rapid expansion strategy” based on organic growth and the acquisition of complementary solutions, the company said in a press release.
Lyceum Capital's Jeremy Hand and Phillip Buscombe have joined the board of Access, while O’Reilly and non-executive chairman Paul Druckman, a former ICAEW president, have left.
According to Bayne, O’Reilly approached the management team with the idea and a plan was developed to pave the way for a smooth succession process via an MBO.
“Alistair was instrumental in getting the business to the position it is today and could have carried on doing so,” said Bayne. “Managment were ambitious and had lots of ideas to take forward. He’s taken the opportunity to hand [Access] over to people he trusts and who will treat it as he would want.”
Access is one of the few remaining independent UK software houses serving the mid-market. Access Dimensions won Software Satisfaction Awards in 2008 and 2010 and the group’s programs are used by around 5,000 companies including Topps Tiles, Sue Ryder Care and Birmingham International Airport,
The new investment comes after a new group structure and rebrand were introduced two years ago, and almost exactly two decades after the company was founded.
The company now turns over around £28m (with an EBITDA of £5.5m), but could have reached the glass ceiling that affects many companies in similar circumstances.
Caught between industry giants like Sage, IRIS, Microsoft and SAP on one hand, and the new generation of Cloud computing developers coming up from below, the Access directors need to find new opportunities for growth.
The tone of the company’s official statement suggests that it will pursue the Sage/IRIS model of buying into new markets and integrating their products and user bases into its portfolio. To a degree, this is a strategy that it has already been following in recent years with acquisitions of Select HR, Armstrong Consultants, and PumaSoft.
“We’ve had 20 years of year on year growth, through a mix of organic growth and acquisition. Looking forward we expect to have the same mix in our growth profile, but expect to be a little bigger and bolder because of the backing,” Bayne said.
Software as a service will also be a significant part of that strategy, he continued: “Already made product announcements and there are more to follow, which may be accelerated through our acquisitions.”
But there’s still a lot of growth potential in on-premise software. Access grew 15% during the past year in a difficult market and will look to expand on successes in vertical markets such as manufacturing and complex distribution, not for profit, HR and professional services. “The future is bright in those areas, “ Bayne said.
As other companies in the business software market have demonstrated, rapid growth presents significant challenges, particularly in maintaining high satisfaction levels among existing customers. “Our strategy is led by the demand of customers and what they want us to supply rather than what people think we should supply,” answered Bayne.
“We want to put the customer first and always do. We strive for quality and I don’t see that changing. While we are looking for aggressive expansion, we will do it in a controlled way to keep to the core values of the business.”