Private equity firm announces major investment in IT business

A private equity firm has invested in a fast-growing business which specialises in cloud IT managed services.

Beech Tree Private Equity, which works out of Manchester and Birmingham, has taken a stake in BCN Group.

Details of the deal have not been made public but Beech Tree, which has been involved in six investments to date, typical invest between £20m and £30m in firms.

BCN was formed in Wilmslow in 2009 by two entrepreneurs Simon Kelf and Matt Smith.

The company is based near Manchester Airport and currently employs around 30 members of staff.

The investment will be used to speed up the growth of the business both organically and through acquisitions.

Beech Tree Private Equity has been looking to invest in the sector due to the rapid growth in demand for the provision of cloud managed services and will support BCN with its plans to scale up rapidly.

According to industry forecasts, the CAGR across public cloud is expected to be 20% over the next five years.

BCN provides a full range of IT managed services to support UK businesses. This includes on-premise, hybrid and cloud hosting solutions, cloud migration services, application support, voice solutions, data management, hardware sales and maintenance services to hundreds of customers across the country.

The firm focusses on technical knowledge and customer services, which has led to BCN’s sector leading Net Promoter Score of 89.

It has also built an end-to-end, scalable management platform and ERP system, which automates tasks and manages customer interactions, ticketing and engineering workflows efficiency.

The company has appointed a new chief financial officer as part of the deal, Julian Llewellyn, whose prior sector knowledge and acquisition experience will help to support the current management team in executing its buy-and-build strategy.

Matt Lovell the former CTO of Pulsant has also joined the board of BCN as a Non-Executive Director to help the business to further develop its cloud services proposition as well supporting the acquisition integration strategy.

Adam Rudd and Andy Marsh from Beech Tree Private Equity have also joined the board as non-executive directors.

Adam Rudd, director at Beech Tree Private Equity, said: “We are delighted to invest in BCN.

“There are several growth drivers impacting this sector and it is clear to us that BCN is well set to benefit from these over the next five years. After meeting many businesses in the space, we were really impressed with BCN.

“We believe the ambition held by the management team, the sales and customer centric culture and most importantly, the technical knowledge held within the business sets BCN apart from its competition.

“We are excited to support the management team in pursuing a buy and build strategy – this is an area in which we have a lot of experience in, having helped many of our other invested businesses to pursue similar strategies.

“We are really pleased that both Julian and Matt are joining the Board as their sector and acquisition experience will be very valuable in helping to deliver our strategy.”

Simon Kelf, chief executive of BCN said: “I am thrilled that Beech Tree Private Equity have invested in our business.

“We have built a strong relationship with the Beech Tree team over the past few past months and their experience, connections and knowledge of the space will help us scale to the next level.

“Matt and I believe that we have built a market leading business focusing on what’s important: technical knowhow and our customers’ needs.

“With Beech Tree’s assistance we will now accelerate our organic growth through further expansion of both our sales team and our cloud services proposition.

“With Beech Tree supporting us, we are now looking forward to embarking on our buy and build strategy in order to accelerate our growth even further.”

Funders of the transaction:

Beech Tree Private Equity (Andy Marsh, Adam Rudd, Ben Cartwright)

Advisers on the transaction:

Advisers to Beech Tree and Newco:

Financial Due Diligence – Dow Schofield Watts (Ed Brentnall, Nick Bolton)

Legal – DLA Piper (James Kerrigan, Christopher Wilson, Alexandra Holden)

Tax – KPMG (Steven Heath, David Lewin)

Management due diligence – i2i HQ Ltd (Michael Finnigan)

Insurance Due Diligence – Vista Insurance Group (Peter Warburton, Gavin Ruben)

Advisers to the Company:

Corporate Finance – Clearwater International (Carl Houghton, Michael Loudon, Shahbaz Qasim)

Legal – Turner Parkinson (David Easdown, David Hayes)