Private equity firm Lyceum Capital has acquired a 56 per cent stake in comms reseller Sabio for £28m and made £30m available to the reseller for acquisitions.
Founded in 1998, Sabio specialises in customer contact technology.
Andy Roberts, chief executive of Sabio, said: "I am delighted to be partnering with Lyceum for Sabio's next stage of growth.
"I have been consistently impressed by Lyceum's deep understanding of our business and the market in which we operate.
"We look forward to working with them to build Sabio into an industry champion with an even greater market share."
The deal sees Roberts leave his previous role as COO to take over as chief executive, with Lee Shorten staying on as chairman. Sabio's founding directors will retain investments.
Lyceum partners Simon Hitchcock and Geoff Neville have also joined the board.
"We identified Sabio as a sector leader with great potential for organic growth and an ideal platform for acquisitions in a fragmented market," said Hitchcock.
"The UK has the most sophisticated contact centre operations and highest adoption of technology solutions in the world, and Sabio is at the heart of that.
"Given its excellent management team and clear understanding of its customers' needs, we believe Sabio is ideally placed to exploit new opportunities and acquire other businesses in the wider market and internationally."
Ian Spence, CEO at analyst Megabuyte, told CRN that he expects to see more private equity firms investing in the channel as more resellers move to a managed service model. He added that a lot of UK private equity firms have struggled to compete with their US counterparts who are typically more interested in scalable software businesses, which has pushed them more towards resellers.
"A number of the players in the channel, the ones in particular moving to a managed service model, will be more attractive to the private equity players because they struggle with the pure reseller model," he said.
"Core Capital with Kelway was kind of an exception, but on the whole they struggle with it because there's limited visibility with it in the revenue.
"Once they [resellers] move over to pure contracted managed services revenue – which a lot of them are – that is more attractive to private equity."
Distributor Wick Hill partnered with Rigby Private Equity last July and chairman Ian Kilpatrick told CRN that choosing the right investor can be challenging, but that you have to make sure that everyone is on the same page when it comes to objectives.
"Typically you only go to a VC two or three times, often only once, and that means that often you are inexperienced," he said. "There are always pitfalls around VCs, and it's right for other people to be cautious or talk to people like me who have been through it.
"You need to pick somebody who is going to be right for you short, medium and long term. Often you find that the goals aren't aligned and people who are inexperienced and unaware of the issues can find themselves in a difficult position."
"From our perspective it's been shockingly successful. Our expansion into Europe is rushing on apace across a number of territories and regions.
The Sabio deal is not the first time Lyceum has ventured into the channel. The firm currently owns security company Clearswift having completed the acquisition in 2011. It also backed a £50m management buyout of Access Group in 2011, before exiting in 2015.
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