LDC, the UK’s leading mid-market private equity firm, has backed the management buyout of construction, contracting and housebuilding software specialist Eque2.
The multi-million-pound investment will be used to accelerate the firm’s growth strategy and buy-and-build programme, along with funding the simultaneous acquisition of the Miracle Dynamics Payroll and HR Solution.
Headquartered in Manchester, Eque2 supplies business management software to more than 1,400 customers in the construction, housebuilding and contracting industries. Its software enables builders, contractors, architects, engineers and estimators to integrate the commercial and financial aspects of their business, driving efficiencies and ultimately improving profitability.
The buyout was led by executive chairman Richard Beaton. Beaton joined Eque2 in 2013 and has supported the growth of the business over the past four years.
The investment, which sees LDC take a significant minority stake in the business, will also support the immediate acquisition of Miracle Dynamics Payroll and HR Solution. Miracle Dynamics is a leading supplier of HRM technology to the Microsoft Dynamics business applications market and will expand Eque2’s current offering.
In addition to the targeted buy-and-build strategy, the deal will enable further investment in the firm’s product portfolio in order to further support its client base. It also provides an exit for private equity firm Livingbridge, which has backed the business since 2013.
Richard Beaton, executive chairman at Eque2, said: “We have achieved significant growth over the last four years, but in order for us to maintain a market leading position it is vital we expand our offering further and capitalise on opportunities in different markets. With the financial firepower and support of LDC we’re confident that we can establish ourselves as the construction industry’s leading provider of specialist business management software and the Miracle Dynamics acquisition is an exciting first step on this journey.”
The deal was led by investment director John Clarke and head of LDC in the North West Jonathan Bell. Both will join the board as non-executive directors alongside Richard Vincent. Vincent has more than 17 years’ experience of supporting the growth of software businesses and in 2016 led the sale of Nottingham-based Union Square to US software giant Deltek.
John Clarke, investment director at LDC, said: “Eque2 has become the leader in its field by offering exceptional solutions, the highest service standards and having an unwavering commitment to addressing the needs of its customers. For us, however, the deal is not just about the strength of the business and the market opportunity, but partnering with and supporting the management team to achieve their growth strategy.”
Jonathan Bell, head of LDC in the North West, added: “This deal marks our fourth investment of 2017 and with a commitment to invest £1.2bn nationally over the next three years we’re confident the North West will continue to drive forward deal activity. There are companies just like Eque2 right across the North West and we’re looking forward to building on our track record of supporting the growth ambitions of the region’s most exciting and ambitious businesses.”
Bevan Duncan, investment director at Livingbridge, added: “We are very proud of the great progress that Eque2 has made since our original investment in 2013. Over the past four years, we have supported Richard Beaton and the team through a rapid period of growth which has seen them expand their presence throughout the UK, develop a new range of construction specific products and increase their market share uniquely across the sector. We wish them all the very best for the future and look forward to watching their continued progress.”
LDC was advised by Pinsent Masons (Gregg Davison) and KPMG (Jonathan Boyers).
Eque2 was advised by Clearwater International.
Banking facilities were provided by Yorkshire Bank (Jane Hartley).