MBO at cyber security leader

Cyber security and software development firm Smoothwall, which last year reported a turnover of £12m, has been bought by private equity firm Tenzing.

The management buyout of Smoothwall, which has it headquarters on Leeds Valley Park and was founded in 2001, sees former COO Michael Marks become Group CEO and several new additions to the executive team and board.

Smoothwall pioneered real-time, content aware analysis that filters incoming web traffic to protect school children and other audiences from inappropriate, illegal, or harmful websites. The firm works closely with schools, local government, healthcare and private sector organisations to protect their networks against cyber security threats. The firm operates both in the UK and US and is seeking to grow in international and UK lower-mid markets.

The incumbent senior management team including Michael Marks, Nicola Sharp, Gavin Logan and Terry Heath will remain in place. The value of the deal has not been disclosed.

Marks will be supported by Lisa Stone as chairperson. Stone was introduced to the Smoothwall team by Tenzing and is a former founding partner at HgCapital. Tenzing has also introduced Richard Hurd-Wood, who joins the team post completion as a Non-Executive Director, to support product advancement.

Hurd-Wood is currently chief product officer of Reward Gateway. The Tenzing team and its Entrepreneurs Panel will support the company with product development and further internationalisation of the business.

With an established UK presence and a growing footprint in the US market, the buyout was conducted after Smoothwall demonstrated consistent sales and EBITDA growth. Estimated at $1.7bn, the global web-filtering market is growing at around 14% per year, driven by increasing cyber security demands and the use of mobile devices in organisations.

Christian Hamilton, co-founder and joint managing partner at Tenzing, said: “Everyone at Tenzing is delighted to be able to team up with Lisa, Michael and their colleagues at Smoothwall, to invest in and accelerate the growth of this market leading technology that has significant benefits to future generations and our wider society.

“We look forward to helping them materially invest in their sales team, develop new products and grow their business internationally, whilst enjoying the journey with the whole team at Smoothwall.”

Stone added: “The team at Smoothwall has developed a highly effective product set for which there is a significant international market opportunity. I’m excited to be joining the team and look forward to sharing my experience to guide them through their next stage of growth.”

Marks said: “As I take the position of Group CEO, I am delighted to have the opportunity to lead Smoothwall into a new chapter, where we are able to respond more rapidly to market demands and become a truly agile and innovative organisation. The backing of Tenzing allows us to give greater focus to our ongoing strategy, one that supports the needs of our customers and enhances the proposition we have to offer.”

Rob Jones, co-founder of Tenzing, led the investment in Smoothwall on behalf of Tenzing, supported by Milan Kellner. Rob and Christian Hamilton, another co-founder, will be joining the board post completion.

Tenzing was advised on the investment by BDO, led by Partner Matt Copley.

Management and Newco were advised on the transaction by Argyll Partners and by Squire Patton Boggs, led by Corporate Partner Paul Mann, Taxation Partner Peter Morley and Corporate Associate Carly Gulliver.

The Smoothwall Shareholders were advised by Walker Morris, led by Corporate Partner Debbie Jackson.