Focus Group’s competitors were “rooting” for it to succeed in a “leaky” sale process that saw it bag unicorn status, Co-Founder Ralph Gilbert has told IT Channel Oxygen.
The business comms and IT provider this morning announced it has swapped private equity backers, with Hg replacing incumbent Bowmark Capital.
The move values Focus at just shy of £800m, thrusting it into a select group of fewer than 50 UK companies with ‘unicorn’ status (private companies valued at $1bn or more).
Gilbert said the feat was achieved just four days behind a goal management set last year.
“About a year ago, the management team all went away for the weekend to strategise, and all that jazz,” he told IT Channel Oxygen.
“I said, ‘right, we want to be a unicorn’, and that’s kind of what we’ve been aiming for ever since. The amount we got is exactly a unicorn.
“We’ve always been a target-driven business. When we did our first process with Bowmark, we had certain goals we wanted to hit by a certain time. And we beat them all.
“[Becoming a unicorn] was the goal we set ourselves on that day – and we were four days behind schedule from when we set it.”
Seven PE firms in the running
Providing comms, connectivity and IT services to around 30,000 SMEs, Shoreham-by-Sea-based Focus ranked 25th in the recent Oxygen 250.
Six other private equity firms were in the running, Gilbert revealed.
Hg, which has made more than a dozen investments in the SME tech services space, showed a “deep understanding of how to maximise and accelerate growth using data and AI,” according to the press release.
“We were lucky enough to have a lot of options, especially in an industry where nothing has really sold for the last couple of years,” Gilbert said.
“Everyone knew we were going through a process – it’s the most leaky process I’ve ever come across. But what was interesting is all our peers came together to support us. It’s quite unheard of when all your competitors are rooting for you. But everyone wanted us to get away with a good result.”
The ESG component of the sale process was “quite large”, Gilbert commented, echoing claims that sustainability is beginning to exert a bearing on how firms in the IT sector are valued.
“We were asked a lot of questions [about ESG],” he said. “If we hadn’t had that in place it would probably have raised a few questions.”
Gilbert concluded: “It’s been an exciting two months, but everyone’s now got their head back in the game and is looking forward to the next chapter of continuing organic growth and M&A with a much larger war chest than we had before.”
In comments to IT Channel Oxygen, Informa Fellow Steve Brazier, said:
“Reaching ‘unicorn’ status makes for a great story but is rather meaningless unless that value is unlocked. The story here is that one PE firm has managed to exit and has found another fund to replace it. In the current high-interest environment it has not been easy for PE firms to exit at acceptable valuations. So this transaction shows it is still possible for channel partners to find new owners.”
Doug Woodburn is editor of IT Channel Oxygen
