Fourteen IP acquisition hunt underway following Beech Tree investment
Beech Tree Private Equity has invested in Fourteen IP, a cloud telephony and AI solutions business based in Wigan that serves the hotels all over the world with technology such as cloud based phones, and is already close to making bolt on acquisitions as part of an ambitious buy-and-build strategy.
The investment will position Fourteen IP for expansion into new geographic regions, notably Asia and Australia, as well as entry into additional market sectors, and through strategic acquisitions, funded through a committed acquisition facility from NatWest.
Founded 14 years ago Fourteen IP’s Evolution Voice and AI-powered EVA (Evolution Virtual Assistant) product will be introduced into new vertical markets, including into the US from its offices in Orlando. Recent customers include the Marriott Hotel in New Orleans and the Sheraton in Boston.
Previous experience in the tech sector suggests Beech Tree will be investing as part of a buy-and-build strategy as it did in scaling up Wavenet with eight complementary acquisitions over a four year period.
In its last set of published accounts to the end of the 2023 financial year consolidated turnover of the group was £16.6m, up £3.8m from £12.8m in 2022. Pre-tax operating profit before exceptional items at £1.8m, up £0.7m from £1.Im in 2022.
TheBusinessDesk.com understands that Fourteen IP’s group turnover is now closer to £20m, but Beech Tree also hasn’t said how much it has paid for a stake, but the mid-market private equity investor typically writes equity cheques of between £10m and £40m.
It’s also been a busy 12 months for Beech Tree in the North West, following the acquisition of Accrington-based Sundown by Telana (formerly Ancoris), one of their portfolio companies, as well as the investment in Sustainable Energy First and their subsequent acquisition of Inenco.
Neil Tolley, founder and CEO of Fourteen IP, said: “Beech Tree’s decision to invest in Fourteen IP validates our vision, performance, and commitment to delivering world-class solutions.
“We are excited about the possibilities this partnership brings and look forward to bringing our exceptional services and innovative technology to new markets and customers around the globe.”
“Our culture and our people have always been at the heart of our success,” he said. “With Beech Tree, we have a partner who understands and fully supports the importance of maintaining the unique spirit and customer-centric approach that makes Fourteen IP so special.”
James Rosthorn, Investment Director at Beech Tree, who is to join the Fourteen IP board following completion of the deal, said: “It has been a pleasure to build a strong relationship with Neil and his team over the past few years. We have closely tracked Fourteen IP’s progress, and investing on their 14th anniversary feels particularly fitting. Our search for complementary acquisitions is already underway, and we anticipate announcing further transactions as we accelerate the M&A strategy.”
Paul Franks, who led Wavenet’s buy-and-build strategy in the telecoms sector is also joining the board.
Beech Tree Private Equity invests £10m to £40m into fast-growing profitable businesses in three key areas – technology, tech-enabled services, and financial services. Beech Tree works with Management teams to build scale and capability, bringing capital and expertise to drive these expansion strategies, building category- leading companies of scale.
Funders of the transaction: Beech Tree Private Equity (Paul Franks, James Rosthorn, Leigh Thomas, Claudia Haywood); NatWest (Mike Malone).
Advisors to Beech Tree and Newco: Financial Due Dilligence – DSW (Ed Brentall, Rob Parker); Legal Advisors – Eversheds (Antony Walsh, Chris Archer, Patrick Davis, Amy Bagni, Mitch Bosi, Zoe Hyde, Lauren Whitehouse); Tax Due Dilligence- Alvarez and Marsal (Nick Walton, Amy Milinkovic, Megan Walsh); Cyber Security (Covert Swarm); Commercial Due Diligence – The Customer Consultancy (Charlie Bantoft); Insurance Due Diligence – Gallaghers (Ian Muldowney).
Advisors to the Company: Corporate Finance – Elucid partners (James Barraclough, Chris Summerscales and Paul Turner); Legal Advisors- Pannone Corporate LLP (Tim Hamilton, Sophie Adshead).
