The 38 private equity houses that back UK resellers and MSPs

Which PE houses back the most UK resellers and MSPs following an influx of deals in recent months?

Following an influx of private equity into the channel, there are - by our calculations - at least 38 PE houses that now back at least one UK reseller or MSP.

According to CRN research conducted as part of the CRN Private Equity Report, private equity houses on our radar made at least eight platform investments of UK resellers and MSPs in the first quarter of 2021, as well as more than 30 bolt-on acquisitions.

Available HERE exclusively to CRN Essential subscribers, the CRN Private Equity Report examines what is behind the private equity feeding frenzy, what owner-managers should be considering when selecting a PE partner, and whether the influx is good or bad for the industry.

An Executive Summary of the report can be viewed here.

Some 12 of the 38 PE houses profiled in the report currently back at least two UK resellers/MSPs, with ten backing at least three.

Here we count down the top five.

5) FPE Capital

This relatively young private equity house now backs three of the CRN VAR 350 after adding SAP partner Codestone to its portfolio in March 2021, and also invested in cybersecurity consultancy Intragen in 2019. It invests between £5m and £20m in lower midmarket B2B software and services companies "to help them realise their growth potential".

Codestone said last month that FPE's investment marks the first outside investment in its 23-year history and provides it with the capacity to pursue acquisitions alongside organic growth.

"Their singular focus on software and services really sets the team apart from more generalist investors," Codestone CEO Jeremy Bucknell said.

Its other investments include London-based MSP Optimity (CEO Anthony Impey pictured, right)

Active UK reseller/MSP investments (4): Optimity, Codestone, TNP, Intragen

Total active investments: 9

Total exits: 12

Sectors: Tech & telco services, software, data & media

Founded: 2016

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The 38 private equity houses that back UK resellers and MSPs

Which PE houses back the most UK resellers and MSPs following an influx of deals in recent months?

4) Beech Tree Private Equity

Investing between £10 and £40m in its charges, Beech Tree currently backs two of the CRN VAR 350 - namely Wavenet and BCN Group - and two other solution providers in the shape of Microsoft partner Transparity and - as of March 2021 - MSSP Performanta. It caters for MBOs, cash-out deals, M&A funding and expansion capital. Almost every business in its current portfolio has made at least one acquisition.

Talking to CRN last month, Performanta CEO Guy Golan said the Check Point Platinum partner will put the investment towards international growth, doubling its R&D team and expanding its security operations centre in Maidenhead.

"We were a private company through and through, so four founders gave the initial seed money to grow the business," said Golan (pictured).

"We've never been in debt, we've never asked for money from others, we've just done it ourselves. But the hard truth is, you can only take a business up to a certain point and you need to bring some high-calibre individuals in to help you get to the next level."

Active UK reseller/MSP investments (4): Wavenet, BCN Group, Transparity, Performanta

Total active investments: 9

Sectors: Technology, financial services, support services, buy & build

Funds under management: £115m

Founded: 2014

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The 38 private equity houses that back UK resellers and MSPs

Which PE houses back the most UK resellers and MSPs following an influx of deals in recent months?

3) Business Growth Fund (BGF)

Set up by the major banks in 2011 to help close a perceived funding gap for SMEs, the Business Growth Fund has already backed almost 400 UK and Irish businesses, including 57 tech firms. Its current portfolio includes four of the CRN VAR 350, and it counts GCI and Olive among its reseller/MSP alumni. In contrast to most of its peers, it only ever takes a minority stake, investing between £1m and £15m a pop.

Talking in 2017 after BGF invested £10m into his firm, Roc Technologies CEO Matt Franklin (pictured) said BGF's light-touch approach made it a natural ally.

"The decision to bring in an external equity investor as part of this process wasn't taken lightly. However, BGF's long-term, non-controlling approach was a good fit with our own ambitions," he said. "The BGF team has a growing reputation in the tech industry and in particular with some of our delivery partners. We have got to know them well throughout the investment process, and are looking forward to partnering with them."

Active UK reseller/MSP investments (4): Inoapps, Roc Technologies, Invenio, TiG

Reseller/MSP exits include: Olive, APSU, GCI, Vysiion

Total tech investments: 57

Amount invested in tech companies: £339m

Staff: 180

Founded: 2011

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The 38 private equity houses that back UK resellers and MSPs

Which PE houses back the most UK resellers and MSPs following an influx of deals in recent months?

2) Horizon Capital

With a laser focus on UK technology and services businesses valued at up to £50m, Horizon Capital currently backs 12 outfits. In the last five years, the buy-and-build specialist has invested in four of the CRN VAR 350, namely Sabio (£25m commitment), Timico (£35m commitment) DMC Canotec (£30m commitment), and Sapphire Systems (£35m commitment). It has supported 22 follow-on acquisitions at this quartet alone.

Neil Muller (pictured) said Horizon's backing of Timico was a "big part" of his decision to join the midmarket MSP as its CEO in 2018.

"From my first meeting it was clear they were a specialist investor who truly understood our sector," he said. "I have been particularly impressed with their support, particularly on finding and executing acquisitions. Consequently, since the start of our journey, we have more than doubled EBITDA and transformed our business."

Active UK reseller/MSP investments (4): Sabio, Timico, DMC Canotech, Sapphire Systems

Reseller/MSP exits include: Adapt

Sectors: Technology services, software, data & analytics, business services

Total active investments: 12

Founded: 2018 (although before that known as Lyceum

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The 38 private equity houses that back UK resellers and MSPs

Which PE houses back the most UK resellers and MSPs following an influx of deals in recent months?

1) LDC

Billing itself as "the most active buyout house in the UK", this Lloyds Banking Group arm currently backs seven of the CRN VAR 350 including OneCom, which has this year acquired rivals Olive and 9 Group. Other recent MSP investments include Kerv, Phoenix Datacom and Littlefish. Typically making an initial lay out of between £10m and £50m, LDC backs "ambitious" growth businesses with actual or forecast annual profits of over £1m. It claims to have supported over 650 management teams in its 40-year history, often investing for a minority shareholding.

Commenting in July 2019 after OneCom secured a £100m investment from LDC, OneCom's then CEO Ben Down said the PE house would help it consolidate a UK mobile and fixed solutions market "where there is a huge number of resellers".

"Onecom has a proven track record of delivering growth and this approach will now be super charged," he said.

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LDC's other recent investments include Kerv, a brand formed last July from the three-way merger of Foehn, DoubleEdge Professional Services and Metaphor IT and headed up by serial channel enterpreneur Alastair Mills (pictured).

Active UK reseller/MSP investments (7): OneCom, Kerv, Littlefish, Solid Solutions, Phoenix Datacom, Commsworld, Centiq

Reseller/MSP exits include: babble (still holds minority stake), Connect Managed Services, Node 4

Sectors: Technology, media & telecoms, travel & leisure, support services, retail & consumer, industrials, healthcare, construction & property, financial services

Assets under management: £2bn-plus

Amount it has pledged to invest in next three years: £1.2bn

Founded: 1981