Businesses keen for private equity investment must prove that they are unique and have scalable technology at their core, according to a key figure at a private equity firm.
Matthew Caffrey, who leads Livingbridge’s TMT investment portfolio in the UK, says the most attractive propositions don’t always have the widest appeal.
“We like niche businesses,” he explained to BusinessCloud. “We specifically look for assets that have the ability to scale quickly, often on the back of technology, supporting them to scale their infrastructure and the service delivery.”
One of the firm’s fastest-growing businesses is Exclaimer, a piece of software which allows users to template and manage email signature sign-offs.
With help from Livingbridge, Exclaimer is now an award-winning SaaS (Software-as-a-Service) business which operates globally and is growing by 50 per cent in compound turnover year-on-year.
“Who’d have thought you could have built a really great business from email signature sign-off software? Not me,” he said.
“Our challenge, alongside those businesses, is how we can help businesses scale, and what magic ingredients we can bring alongside them, with all of our software experience. “
Livingbridge, which has more than 35 businesses in its portfolio, has been investing in tech for over 20 years and offers an in-house team to its investments which includes digital marketing, talent and recruitment, and IT. The company has offices in London, Birmingham, Manchester, Melbourne and Massachusetts.
Caffrey believes that private equity firms’ interest in modern technology and tech-powered businesses is still on the rise.
“There are investors who have historically had never invested a significant amount into technology suddenly becoming much more aggressive in their technology investments,” he said.
“There will be more opportunity for PE investors to invest in the market, not just in software businesses, but in tech-enabled services as well; businesses where customers perceive that they are being delivered service which is enabled by the technology behind the scenes enabling them to love their customers more.”
According to Caffrey, even big businesses which continue to rely on their existing ‘legacy technology’ will be hard-pressed to find the same interest.
In the UK particularly, businesses are not fully seizing the opportunity to adopt “robotic process automation, workflow management, and AI to improve productivity and workflow”.
“Alibaba launched their banking platform and in six months they signed up more customers that HSBC had done in 150 years,” he said.
“That’s going to make you think about the infrastructure that you’ve got and how you go to market. The only way you do that is by changing the technology that delivers it.”