One of the UK’s biggest software success stories is set to be taken over in a £1.1 billion deal amid a bidding war – and is far removed from the bubble of FinTech and MedTech valuations.
Ideagen’s software helps companies comply with regulation and manage risk. It serves more than 8,000 customers, including Heineken, British Airways, the US Navy, the Bank of New York and the European Central Bank.
It counts seven of the UK’s top 10 accounting firms, three quarters of the world’s biggest pharmaceutical companies and all of the world’s top aerospace and defence companies among its client base.
Ideagen has a HQ nestled near Nottingham but employs 700 people worldwide. Despite its huge presence, the London-listed RegTech does not grab the headlines as aggressively as, say, the UK’s digital banks.
If you are a fan of Nottingham Forest – the club beloved of CEO Ben Dorks – you will have seen Ideagen sponsorship around the City Ground. If you follow the tech press closely, you may be aware that the company has itself snapped up more than 20 smaller firms in recent years.
What makes Ideagen a real success is that this unicorn-level valuation is not based on repeated funding rounds; rather, it has grown sales and profits for 12 consecutive years, including through COVID. It reported almost £40m revenues in the six months to the end of October, a 33% rise – crucially, with 88% of those on a recurring basis – and underlying profits of £13.2m, up 32%.
No wonder, then, that several suitors came forward in April looking to table bids. Following a flurry of activity, Ideagen is to recommend to shareholders an all-cash offer from London-based private equity firm Hg Pooled Management which values it at £1.09bn.
Shares in Ideagen jumped 46% to 355 pence on Monday, above Hg’s offer price, with a counter bid from French rival Astorg – with which Ideagen is continuing to hold talks – expected. London-based private equity firm Cinven pulled out last week.
Speaking to BusinessCloud before the takeover approaches, Dorks told BusinessCloud that “the acquisition process is much easier as a buyer than a seller”.
“As a seller, you’re under a lot of pressure to maintain your business during that time, and provide a level of granularity that you’ve never given any thought or concept to,” he said.
The CEO was referring to the pressure upon SME entrepreneurs being acquired by larger companies, rather than those running multinational businesses already with large teams behind them – but it provides a snapshot into his background and mindset.
His own startup Plumtree Group was acquired by Ideagen in December 2012, months after the acquiring business listed.
“One piece of advice I give to all sellers is make sure you have really good advisors who work with you and are there to support you – because you will need them,” he said. “During the acquisition process, just accept you’re going to have to pay somebody 2-3% to be there – and that’s not legal advice, that is a corporate finance person who has sold businesses before.”
Dorks would serve as sales and marketing director then chief customer officer before taking over the top job.
“I’m a very driven individual. I came into Ideagen as a place I could build a career. I felt in the CEO who was here before me, David [Hornsby], that I could learn a hell of a lot from him – and I did,” he said.
“My philosophy has always been: at the point that David says that he’s leaving, everybody in the business and externally just goes ‘it’s going to be Ben, isn’t it?’
“I would always ask for more responsibility, more accountability. And it just became a bit of an inevitability that I would become CEO. But it was absolutely something I always wanted.”
His public plans for Ideagen early in the year did not include a takeover. “We’re just under £90m [revenues] today. I expect us to continue our twin focus strategy of organic growth and making acquisitions,” he said at the time.
“We raised £100m just before Christmas so we have a balance sheet that supports us in further acquisitions this year. And I’ll be very disappointed if we’ve not grown the business substantially during the next 12 months.
“We’re quite public about our vision: we want to be a £200 million ARR business by 2025 and therefore the businesses we acquire are very clear on what their part of that looks like. And that’s a really important part of our purpose and vision.”
Hg partners Christopher Fielding, Joris Van Gool and Jean-Baptiste Brian said: “We have long admired how Ben and his highly motivated team have grown Ideagen into a leader in its sector.
“We recognise that Ideagen is a global organisation with stakeholders around the world, but with deep community ties and a strong local heritage.
“We strongly believe that the core of the business should be maintained in its Nottingham base, including its executive team and technological development centre.”
The company recently partnered with the Nottingham Forest Community Trust to launch ‘Think Big’. Dorks expects the company to deliver presentations to about 8,000 children in schools this year, with a view to encouraging them into technology careers.
He says the association with former European champions Forest – set to play Sheffield United in the first leg of the Championship playoffs this weekend – results in a higher number of applicants to the business.
“Building this business in my own backyard where I grew up, and being able to support the community in which I grew up is a hugely important reason as to why I’m still so driven to make this business a super global success,” he said.