the
wire2017
HR managementCloud-based solutions
Future of cloudTrends for 2017
VoIP marketTransforming communications
Fitness and leisureEnhancing the user experience
Clearwater International’s annual TMT sector commentary
NEW DAWNHow cloud applications are transforming the world of work
2welcome
“What is striking is that, according to those we interviewed, so many large companies are still running antiquated HR systems, seemingly unaware of the huge benefits of transferring to cloud-based systems.”
the wire | 2017
the wire is published by Clearwater International Editors: Jim Pendrill & Ruth Farrington Design: www.creative-bridge.com Subscription: [email protected] No part of this publication may be reproduced or used in any form without prior permission of Clearwater International.
Carl Houghton Head of TMT
The HR industry is just one example of where cloud-based management systems are helping revolutionise the world of work. Indeed, it was no coincidence that a number of winners at our recent Cloudex awards – which celebrate excellence across the cloud industry - were specialists in the HR space, providing cutting-edge solutions to the huge workplace challenges that companies face.
In this issue we talk in-depth to leading players in the HR systems field to find out what is driving this exciting market and the growth of companies in the sector.
What is striking is that, according to those we interviewed, so many large companies are still running antiquated HR systems, seemingly unaware of the huge benefits of transferring to cloud-based systems.
These benefits can stretch far and wide within a business, leading to smarter ways of working, more collaborative cultures, better employee engagement, and far greater efficiencies.
This point about engagement is perhaps the most critical of all and where the cloud can really come into its own. Studies suggest that on average only a third of
staff are fully engaged within a business. If this is true, then surely any software tools that can help bridge this lack of engagement must be welcomed with open arms.
In this magazine we also take a look at the changing landscape of the VoIP (Voice over Internet Protocol) market and how cloud solutions are further transforming the
telecoms sector. We profile two emerging European players in the market, Snom Technology and VozTelecom, and hear what is driving their growth.
Finally, as we head to the gym to fulfil our New Year resolutions, we take a timely look at how cloud systems are revolutionising the fitness and leisure industry.
We hope you enjoy the read.
Game changerCloud technologies are rapidly transforming a vast swathe of different markets, bringing huge benefits for companies and customers alike.
Meet the team3contents
the wire | 2017
Contents2
welcome
4HR systems
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8future of the cloud
11M&A review
9VoIP market
14Exerp
f15deal focus
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Carl Houghton International Head of TMT, UK +44 845 052 0344 [email protected]
Per Surland Partner, Denmark +45 51 90 40 19 [email protected]
Thomas Gaucher Partner, France +33 1 53 89 0505 [email protected]
Axel Oltmann Partner, Germany +49 611 360 39 22 [email protected]
John Sheridan Partner, Ireland +353 1 517 58 41 [email protected]
José Lemos Partner, Portugal +351 917 529 764 [email protected]
Miguel Ángel Lorenzo Director, Spain +34 659 094 041 [email protected]
Emma Rodgers Director, UK +44 845 052 0359 [email protected]
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the wire | 2017
Cloud-based HR systems are transforming the world of work. We spoke to companies at the forefront of the revolution.
4HR systems
For businesses today there are not just significant operational issues when it comes to managing their staff and HR systems, but major strategic challenges too.
So says Paul Burrin, Chief Marketing Officer at Fairsail which offers a cloud-based HR and People system for mid-sized multinationals to automate HR and get the best out of their staff.
As he explains: “The immediate operational issue is that these companies are often growing fast yet simply don’t know enough about their people, because they are running antiquated HR systems or relying on spreadsheets.
“It never ceases to amaze me how companies can spend a small fortune on their finance, sales and customer systems, but so little on their own workforce. They invariably know more about their customers than about their employees.”
As if these challenges were not enough, Burrin says we are also in the midst of a bigger shift. “I describe it as a general move from HR to ‘people’, supported by new roles such as people scientists, or new processes such as people marketing.
“HR typically looks at employees as a resource or capital, rather than as individuals with talents and skills who have hopes, dreams and aspirations. You have to have a more complete picture to get the best out of your staff.
“This drive is supported by technologies that provide workforce visibility and integrated, end-to-end HR process automation which allows the company to deliver great workforce experiences.”
War for talent
Burrin says that what is driving this sea change is both the global war for talent and
the lack of engagement within businesses. “Companies are often battling with both challenges simultaneously. On the one hand they are struggling to get hold of, and keep, good people. On the other, it is keeping staff engaged and productive.
“Studies have suggested that in a typical business less than a third of staff are fully engaged. It is a major reason why productivity levels continue to be poor across many countries. It comes down to motivating people and designing smarter ways of working.”
The point is echoed by Andrew O’Shaughnessy, CEO and founder of Ireland-based Newsweaver, a corporate Internal Communications (IC) technology business which has pioneered solutions that overcome the complex challenges facing internal communicators working for companies with very large workforces.
Workplace revolution
the wire | 2017
“Those businesses which are good at IC outperform their peers time and time again.”Andrew O’Shaughnessy, Newsweaver
5HR systems
“People are smart but too often companies simply don’t treat them as such. They are not communicated to properly, and without effective communication it’s very difficult to engage people. But when they are engaged the results can be spectacular,” says O’Shaughnessy. “It’s only by releasing the power of their people that companies become great.”
Technology
Against this backdrop, large organisations are looking for smart cloud-based solutions to help make them both more efficient and responsive to their employees.
Adds O’Shaughnessy: “If you take the IC industry, up until now it’s actually been underserved by technology. But that is changing fast. The CEO now wants to have key metrics at his or her fingertips, seeing
the feedback on particular initiatives and campaigns, and seeing the impact of particular measures. It is only when you know precisely what is happening in your business that you can formulate a strategy to improve what you are doing.”
O’Shaughnessy concedes that the 24/7 nature of global business can make this a particular challenge. “Keeping everyone aligned can be difficult.” But he says in recent years there has been a huge change in thinking within the IC industry.
“Companies are really recognising the power of it, and it’s actually being driven by employees. Those businesses which are good at IC outperform their peers time and time again. Research has consistently shown that effective employee communication is a leading indicator of financial performance and a driver of employee engagement.”
Being able to measure the effectiveness of a company’s communication and impact on engagement is critical, he adds. For instance, Newsweaver recently launched a ground-breaking cross-channel analytics product which enables companies such as Unilever to easily measure internal communications performance across multiple platforms including email, intranet, video and enterprise social networks (ESNs).
Analytics
Burrin says the key is to use not just HR, but people analytics to help companies get to know their staff better.
“Information is available in systems both within and outside a business. Internally these could be from your HR, CRM or financial applications. Externally there may be additional publicly available data from sources such as LinkedIn, Facebook and Twitter.
“Combining and analysing these sources helps an organisation get a more complete picture of its people, and people analytics can be used to identify previously unseen patterns and trends. For example, it might help identify potential employees that are a flight risk, or whether the company is really paying for performance.”
the wire | 2017
“If recruiters use the same tools they will get the same results.”Dean Sadler, TribePad
6HR systems
Social media
One company that relies heavily on social media is TribePad, a developer of applicant tracking software which helps companies filter quickly through thousands of applications for particular posts.
Because companies increasingly only advertise online it means candidates can apply for hundreds of jobs at any one time. As co-founder and CEO Dean Sadler says: “People increasingly take a scattergun approach. But when someone uploads their CV as part of an application it is just words, they don’t really tell you anything about that person. Software-as-a-service (SaaS) solutions make it easy for a potential employer not only to read a candidate's CV but also to find out far more about that person. For instance, they allow that company to know if a particular candidate is looking for other jobs. Together with LinkedIn and Facebook posts they can help a company build up a personal profile.”
Sadler says TribePad has to be mindful of delivering a value-added solution. “If recruiters use the same tools they will get the same results. That’s precisely why our software uses a range of tools which allow us to build up pictures of candidates.”
The company is also increasingly using video technology. “We take a video stream of a candidate and transcribe the audio into text which then allows the recruiter to search particular answers to particular questions. Such tools massively compress the time it takes to find the right people.”
However, Sadler stresses that such a scattergun approach doesn’t apply to more specialised job roles. “In these instances we go and find those people who have the skills and start to engage with them. They often have niche skillsets for highly skilled roles and it's not uncommon for them to work globally.”
Data challenges
Steve Arnold, Commercial Director at absence management software specialist e-days, says one of the problems for HR teams is getting hold of the accurate and reliable employee data that’s needed to inform strategic decision-making. He says historically it’s been very difficult to get hold of HR data, particularly for multinationals running outdated HR systems. “You almost need another solution developed to compile the data, or you need data analysts working multiple Excel files.”
This has, however, created an opportunity for the likes of e-days. “We developed a flexible report building system into our e-days solution that allows the customer to cut the data in any way they want, putting control firmly in their hands. We recognise that all firms are different, and that HR, finance, payroll and other executives all have different data reporting needs, so we give them that control.
the wire | 2017
7HR systems
“When we ask prospective clients how they manage HR absence data, many struggle with the answer and they love what they can do with data in e-days, and many of our clients use it in very insightful ways.
“For instance, we recently visited a company that was using paper and spreadsheets to manage employee leave across a 3,000 strong workforce. This was creating a data reporting nightmare for payroll which has now been replaced by a click of a button within e-days.”
Arnold says that when the company originally saw a gap in the market for online absence management it thought the solution would be mainly for small firms, however this quickly changed.
“Very early on we started getting larger companies coming on board. These clients had HR systems, but the systems lacked the flexibility to deal with the complexities of managing absence at a global level.”
Interestingly Arnold has also seen an emerging trend where companies are looking for a best of breed suite of SaaS HR solutions.
“Instead of looking for one HR system that will do everything, they seem to be embracing a marketplace for HR SaaS solutions. The marketplaces generally contain approved SaaS solutions connected to specific lead HR/payroll systems. In this way companies can get best of breed solutions across multiple specialist areas and they’re not tied in to one supplier for everything for several years. One of our strategies is to make e-days as ‘connected’ as possible and to appear in every HR solution online market-place, opening significant new channels to market for us.”
Benefits of cloud
The underlying strength of all of these companies is the cloud. As Burrin says: “With cloud systems the vendor takes responsibility for delivering SaaS to help reduce IT costs, gain faster adoption, and realise a rapid return on investment for customers.”
Arnold says smaller companies like his can develop really niche businesses. “The barriers to entry are so small. All you need is a smart group of people with a smart application and the world can be your oyster. Personally, I like the fact that we are also providing something that makes everyone’s daily life just that little bit easier.”
O’Shaughnessy says first-mover advantage can be key too. “If you take the IC industry it is seen as quite a small market by the very large software players which plays to our advantage. We are helping build up an almost entirely new software category which is growing fast.”
To help serve growing global demand, Newsweaver opened its first office in the US in Boston in 2014 and is looking at possibly opening up another on the West Coast. “We are following customers who will typically put our products into a team, trial it, and if successful then roll it out. The beauty of the software is that it is so intuitive and easy to use.”
However O’Shaughnessy stresses that it is not all about geographic spread. “We are building up a category defining product. There is a lot that we can do over the next couple of years to establish our products further. There is no reason why as a business we cannot be the global leader in our field.”
Pick and mix
Sadler says ultimately one of the key benefits of SaaS solutions is that they can help solve a myriad of problems at the same time. “It is a pick and mix approach and all we are doing is trying to find problems to solve. The technology is now getting to a really interesting stage, whether it be video, facial recognition or even AI (Artificial Intelligence) engines.
“For instance when an employer is watching a video of a candidate they can search for the words they are saying as if they were doing a google word search. And because we know what the candidate said and what phrases they used, when you aggregate all this information together you can determine an individual’s characteristics and personality traits.
“The bottom line is that people have been giving their personal data away for the last 10 years and businesses can actually use this data positively. At the end of the day I am not telling businesses how to use this data, just creating the technology that enables them to use it effectively.”
the wire | 2017
We run the rule over the key trends in the cloud industry in 2017 and beyond.
Keen to profile innovative and emerging players in the cloud industry Clearwater International has now been running its Cloudex awards for four years, each year highlighting the UK’s top cloud technology businesses.
Our judges last year remarked that 2016 saw a growing maturity within the industry, as corporate customers increasingly embrace the cloud in ever more functions of their business. In particular, a number of companies that were borne out of the dotcom era are now starting to firmly establish themselves. These players are being driven by data, diversity and scale, while most now enjoy clear paths to profitability.
We will be running the awards once again in 2017, and if you would like to enter or would like further information about the competition, please contact Clearwater International Director Emma Rodgers at [email protected] or visit clearwaterinternational.com/cloudex/
Cloudex 2017
8future of the cloud
Market trends
Accelerated migration to the public cloud
Businesses will increasingly move to the public cloud for the advantages of better information management and security, and the largest beneficiaries are likely to be large public cloud suppliers. For instance, market leader Amazon Web Services is expected to announce it hit revenues of ¤11bn in 2016, while Microsoft Azure is expecting to again grow turnover 100% year on year. Google, IBM and Oracle are also predicting strong cloud financial growth.
Blockchains in global procurement
One of the most innovative cloud breakthroughs of recent times has been blockchain. This is a peer-to-peer platform secured by advanced cryptography for business and personal transactions. It restricts participation to a small number of users and only shows the information each party is authorised to see. It is estimated that it could save almost ¤100bn in annual supply chain efficiencies.
Cloud becomes an enabler of security
Against a background of increasing European Union regulation and high profile data breaches, concerns about information protection still dominate. Major cloud providers are developing new cognitive abilities to fight security vulnerabilities,
and turn what was originally perceived as a weakness of the cloud into a strength. UBS predicts flat corporate spending on IT as cloud computing service providers look set to take over cyber security customers.
Industry transformation driven by cognitive computing
The Internet of Things (IoT) and other key cloud computing trends are generating a vast amount of data, which is growing disproportionately to our ability to make sense of it. 80% of the world’s data is classed as dark, collected by computers but unusable by humans. Cloud servers, storage and software are being built using cognitive solutions to allow for the interpretation and understanding of this data. These solutions could stimulate transformation across numerous industries ranging from financial services and retail, to the healthcare and airline sectors.
Rise of multi-cloud strategies
The use of multiple cloud services will become the norm for many businesses as they seek to combine optimal features from a number of providers. It is highly unlikely that even the largest public cloud players will be able to address all IT needs and therefore it is expected businesses will shop around.
the wire | 2017
9VoIP market
The business communications industry is moving rapidly towards a cloud-based environment as consumers seek the same tools at work as in their personal lives.
Smooth transition
Just as Skype made consumers and businesses aware of the potential of the internet to make voice calls, we are now on the cusp of another era whereby cloud communications are introduced far more widely into the business market.
So says Xavier Casajoana, CEO of VozTelecom, a Spanish cloud communications operator which enables VoIP (Voice over Internet Protocol) services for the enterprise market over the internet. “Just as in their personal lives, people now expect to have the same access to communication tools through the internet at work. Companies need systems that connect all workers and they are using the cloud to do that.”
His beliefs are certainly borne out in the data. The market for VoIP services and hardware is forecast to grow at a CAGR of 9.1% between now and 2021 as it rapidly replaces landlines as the standard for both residential and business customers.1
As Casajoana adds: “The cloud is now replacing old legacy PBX (Private Branch Exchange) systems which have been around for as long as 40 years, and a key driver of this is the move away from ADSL lines with low bandwidth to fibre access with much greater width. This allows for a vast range of enhanced services for businesses such as better video conferencing, instant messaging, call centre functionality, and data recording.”
He says packaging up the range of service offerings for customers, and conveying the flexibility of cloud services, is key for companies such as his. “For us the offering is based upon three key pillars. Namely internet access using broadband networks, providing all telephony services both fixed and mobile, and offering PBX in the cloud.”
Service levels are also crucial. “We manage our customers through our own call centre and it’s essential we provide a five star service, that is our main value proposition. It is critical for our clients to have absolute confidence in us because these are business critical services we are dealing with. It is about helping our customers make a smooth transition from old to new systems.”
Huge market
In the US the penetration of cloud services in the business market is currently running at around 20%, but Casajoana says the figure is nearer 5% for most of Western Europe. “We specifically target the SME market and there are half a million such companies in Spain. That is a huge target market for us.”
Last year VozTelecom completed a successful IPO and now plans to use its new capital to expand its footprint further and deeper across Spain. “Our plan is to consolidate the cloud communication space in the mid-market and over the next
few years there will be opportunities for us to make acquisitions so that we can build up a very strong proposition in the Spanish market. Our target is to effectively double revenues to ¤20m by 2019.”
There should be plenty to go at for the likes of VozTelecom given how fragmented the market remains. Spain, like the rest of Europe, is dominated by niche domestic players in this market and there are significant opportunities for providers to target the largely untapped market of SMEs by emphasising the cost savings and flexibility associated with a VoIP offering.
Attractive targets
The potential growth of the market means those players with leading edge technologies also become particularly attractive targets. For instance, Clearwater International recently advised HeidelbergCapital Private Equity on the sale of German company Snom Technology to Hong Kong-listed VTech Holdings.
Snom was founded 20 years ago by a group of university friends at the cusp of
10VoIP market
the wire | 2017
the internet revolution and today remains one of the leading brands of professional and enterprise VoIP telephones. It is globally renowned for its robust, high-quality phones that are designed exclusively for the trained and certified IT professional and PBX installer, while all of Snom's products are universally compatible with leading PBX platforms.
André Deloch, Partner at HeidelbergCapital, says the secret to the company’s continued growth has been the development of its open session-initiation protocol (open SIP) which enables VoIP connections to be made on a large scale. “The company is perceived as a technological pioneer in the VoIP market. It offered some of the first hardware endpoints for VoIP telephone calls and the open-SIP VoIP market has been defined and shaped by the business. As such the company is a sought after and reliable partner for all PBX service providers.”
He adds that the industry has been strongly influenced by the rise of hosted PBX service offerings in the cloud. “The initial cost for setting up a telephone system has moved from capex (capital expenditure) to opex (operational expenditure/rental models) for cloud based PBX software.”
Synergies
In terms of the sale to VTech, Deloch says there is a large strategic fit between Snom’s technological expertise in VoIP for B2B and VTech’s vast experience as the world’s largest wireless phone manufacturer for the B2C market. “The synergies can be realised through the reduction of manufacturing cost, operational improvement, joint sourcing, joint market access, technological expertise in different areas of the communication industry, and exposure to both the B2B and B2C markets,” he adds. “Snom is constantly developing new and advanced IP technology solutions and has one of the strongest brands in B2B VoIP communication, standing for technological leadership in a fast moving industry, so had very strong appeal to VTech.”
Deloch says both businesses will grow faster and develop an even stronger market position by aligning technological and manufacturing expertise. “The combination can lead to a new market leader in wireless and VoIP telephone communication for B2B and B2C customer segments. VTech is a global leader in electronic learning products, while it also provides highly sought-after contract manufacturing services.”1 Market Research Store
11M&A review
the wire | 2017
Private equity’s appetite for TMT assets shows no sign of diminishing
On the upIn 2016 the number of TMT transactions completed globally continued to fall with volumes down 8.7% on 2015 figures. Economic slowdown and political uncertainty have been contributory factors along with the fact that many companies have opted for developmental partnerships rather than M&A.
Meanwhile, if 2015 was considered the year of the mythical unicorn start-ups valued at $1bn plus, then a new breed came to light in 2016, namely the cockroaches. As some unicorns such as Powa and Zenefits hit the headlines for all the wrong reasons, the year saw a backlash against the prioritisation of scale over profitability.
Cockroaches largely avoid superfast growth and focus on building a sustainable model more slowly, keeping a close eye on the bottom line. These cockroach investments perhaps set a different tone for the M&A market, one which focuses less on the fear of missing out on the next big innovator and more on the genuine fear of losing money.
Market data
The average size of a TMT transaction with a disclosed value increased by ¤12.1m to ¤100m in 2016. This is still lower than the heady heights of ¤145.4m seen in 2013, suggesting that there is still a significant focus on mid-market transactions. However, the top ten deals in 2016 were of significantly higher value than those in 2015, demonstrating that some segments of the market returned to mega acquisitions.
Two key media deals really stood out with AT&T’s ¤98.6bn acquisition of Time Warner and Twenty First Century Fox’s ¤30.1bn purchase of UK business Sky. Both deals reflect an increasing industry acceptance that media content and distribution are a powerful combination. Software giants also made a return to the top ten last year with Microsoft’s acquisition of LinkedIn and Oracle’s purchase of Netsuite.
Whilst telecoms deals dominated the top ten in 2015, there was only one major transaction in 2016 with Century Link’s
acquisition of Level 3 Communications. This is perhaps a reflection of a market that has been characterised by acquisition activity in previous years and therefore has arguably become increasingly consolidated.
Year Average enterprise value
(¤m)
2016 100.0
2015 87.9
2014 102.9
2013 145.4
2012 64.7
2011 60.7
2010 44.3
TMT transactions average enterprise value 2010-2016
SOURCE: Clearwater International, Zephyr
6.0
35.9
33.9
24.2
5.5
36.0
31.6
26.9
Europe North America Asia RoW
12M&A review
the wire | 2017
Deals by target region in TMT 2015 - 2016
SOURCE: Clearwater International, Zephyr
2015 2016
Tech IPO’s failed to rebound
2016 was the worst year for technology public offerings since the recession in 2009 with just 21 listings compared to 29 in 2015. Political uncertainty post Brexit and the election of Donald Trump were certainly contributing factors.
Yet firms such as Twitter and Groupon have highlighted another issue. Investors have become wary of backing firms without clear routes to profit as many have continued to lose money post IPO. It is also worth noting that tech start-ups have also had greater access to private equity funding, delaying the need to use public markets for expansion.
In spite of the statistics, many TMT companies that did go public performed very well. Japanese messaging service
provider Line and US cloud platform Nutanix are trading well above their opening day IPO prices. With Snapchat announcing it is going public and rumours abound that Airbnb and Uber will follow suit, 2017 may well be a bounce back year for IPOs.
Meanwhile, North America and Europe continued to dominate the TMT M&A market representing 67.6% of the market between them. The number of transactions featuring an Asian Pacific target also rose by 2.7%. Targets from the rest of the world including Africa and the Middle East remained relatively constant at 6% of the market.
Private equity’s love affair continues
Private equity’s appetite for TMT assets shows no sign of diminishing in 2017.
Whilst European and American private equity money continued to dominate the market, the level of interest from Chinese investors also dramatically increased. In January 2017, Chinese technology investor Cocoon Networks raised ¤690m to invest in technology start-ups in Europe. Fintech, gaming and online payment firms have already proved to be particularly attractive to Chinese firms.
Despite the growth of mega cloud players such as Amazon and Microsoft, B2B hosting firms are still commanding significant private equity investment throughout Europe. In the UK Node 4, Wavenet, Optimiv and Giacom all attracted new owners with investors enticed by a number of successful investments and exits in the space. In 2016, Lyceum also sold Adapt to US firm Datapipe and Livingbridge sold Onyx to UK firm Pulsant.
the wire | 2017
13M&A review
In 2015, Clearwater International advised Danish web hosting company Zitcom on its sale to UK private equity house HgCapital. The Danish market was particularly attractive to HgCapital because it is composed of a high number of smaller players. It plans to use a buy-and-build strategy with Zitcom and establish it as the clear market leader in Denmark.
This activity is a trend reflected around Europe and in the US. In the largest hosting deal of 2016, US-based Rackspace was acquired by Apollo Global Management for ¤3.7bn.
As well as hosting, private equity investment in the media industry also remained strong. As companies increasingly demand more efficient customer targeting and better returns on advertising spend, marketing software has become hot property.
For instance, KKR invested in Smart Communications, a business that provides a platform for multi-channel consumer interactions. Data providers have also been sought after assets, typified by Clearwater
International advising eCRM business Creator on its sale to Bridgepoint-backed Inspired Thinking Group.
The one area in which trade and private equity buyers seem out of kilter is their appetite for content. Whilst trade buyers across the spectrum have subscribed to the theory that content is king and have been prepared to pay some pretty attractive prices, private equity appetite has been lukewarm. Whilst the media segment is undergoing revolutionary changes to its revenue and distribution models these investments perhaps struggle to deliver the predictable earnings that private equity investors crave.
Future prospects
Looking ahead we believe cyber security specialists will continue to attract widespread attention. As high profile data leaks continue to occupy numerous column inches, demand for their services will only get higher so expect to see more deals like KKR’s ¤60m investment in UK enterprise immune system technology specialist Darktrace.
As in 2016 we expect the Internet of Things and machine to machine technology to continue to generate significant excitement, with their potential to solve problems in a multitude of end markets. 2017 should start to give us a clearer picture of the leading players across both fields, and significant acquisitions are likely.
And what of the battle between unicorns and cockroaches? It is likely that we will continue to see evidence of the ‘great reset’ as over-inflated valuations remain a problem for some unicorn models. But while cockroach firms may be the star technology firms of the future it is too early to write off some key unicorns just yet.
Private equity sponsored European hosting transactions
Target Activities Private equity investor Enterprise value (¤m)
Node 4 Colocation and hosting provider Bowmark Capital n.d.
Wavenet Business communications company Beech Tree Private Equity 41.7
IT Relation IT outsourcing services Adelis Equity Partners n.d.
Optimity Technology service provider FPE Capital n.d.
Zitcom Hosting provider Hg Capital 24.0
Giacom Cloud hosting services LDC n.d.
SOURCE: Clearwater International, Zephyr
14Exerp
the wire | 2017
Clearwater International recently advised Exerp, a Danish provider of cloud-model enterprise club management systems for the fitness and leisure industry, on the sale of a majority stake to Technogym, a manufacturer of high-end fitness equipment. We talk to Exerp CEO Rémi Nodet.
In good shape
Tell us what Exerp does?
Our product solves most IT problems in a fitness chain, whether they be billing or booking issues, or the deployment of apps and websites. Our aim is to fundamentally change the way fitness operators interact with their members.
What is your target market?
Our clients include major fitness chains across Scandinavia, the UK and North America. We only focus on the large independent operators which are more prepared to invest in this area and push the technology forward with software suppliers like us in order to really enhance the member experience. These chains are not interested in a piece of limited standard software.
What is your background?
I’d been a software developer for several years and joined Exerp in 2003. I could see that customers in gyms and fitness chains wanted to be offered more complex and digital experiences, but these can be complicated and expensive to build. I think my own background in programming helps create a really strong collaborative culture within the business as I understand the issues our software developers are dealing with on a daily basis.
Tell us about the background to the deal with Technogym?
Our founders had not been involved with the running of the company for some years. Initially I was just thinking I needed to bring some new people onto the board, but then realised it ran much deeper than that and we needed to adjust our ambitions.
We ran a sale process and Technogym were not only the most engaged buyer but offered us the combination of a long-term strategic partnership alongside access to a global network. The company really knew the space we operated in and we could see how it could bring value. Technogym has a strong vision of what it wants to achieve for both its clubs and its members which we share, and the deal increases its capability to offer fitness operators a complete solution to improve the end user experience.
What was this vision?
We describe it as a vision of ‘connected fitness’. Namely, technology and training coming together with more interactive and electronic communication for members. In order to do that you need equipment that is connected with the right software to handle training data, and Technogym were missing some pieces of that jigsaw.
What kinds of things can the technology do?
From the moment a customer walks into a gym they can be using our technology. For instance, an app can notify the gym and a personal training instructor that you have arrived and where to find you before you even start going through a connected training plan. It extends beyond the physical workout though as well. For example the gym can tie in commercial offers for sports nutritional products. It is about enhancing the whole user experience.
What are Exerp’s plans now?
Following the deal we will continue to operate as a separate business as we want to maintain our agility. We are forecasting 35% growth this year and our aim is to double turnover over the next three years. Expanding into North America is a particularly big focus for us and we recently opened an office in Florida to support our existing clients and develop new business. For instance, one client is GoodLife Fitness which operates 250 clubs across Canada. What is interesting is that although the US tends to lead the way in terms of fitness trends, it is actually a bit behind Western Europe with regards to developing the technology that can support those trends. So we are bringing something new to the market.
15deal focusDeal focus
An overview of our recent cloud deals
the wire | 2017
Leading provider of enterprise club management systems for the global fitness and leisure industry
Clearwater International advised the owners of Exerp on its majority share sale to Technogym
Exerp
Award-winning education finance software business, providing SaaS solutions to schools
Clearwater International advised the shareholders of HCSS Education on its sale to Access Group
HCSS
Leading German producer of VoIP telephones
Clearwater International advised HeidelbergCapital Private Equity and the founder of Snom Technology on its sale to VTech
Snom Technology
UK’s leading e-procurement solution provider
Clearwater International advised Wax Digital on its sale to August Equity LLP
Wax Digital
Provider of environmental, health & safety, quality & loss prevention software
Clearwater International advised the shareholders of Rivo on its sale to Kennet Partners and Fidelity Growth Partners Europe
Rivo Software
Leading Danish publisher of K-12 digital educational materials
Clearwater International advised Clio Online on its cross-border sale to leading Swedish media group Bonnier
Clio Online
Developer and marketer of SaaS based solutions for the architecture, engineering and construction industry
Clearwater International advised Byggeweb’s shareholders on the sale to RIB Software
Byggeweb
Leading hosting business based in Denmark
Clearwater International advised Zitcom on the sale to UK-based HgCapital
Zitcom
Provider of information management software to the architecture, engineering and construction industries
Clearwater International advised Union Square on its sale to Deltek Inc
Union Square
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