Double exposure image of many business people conference group meeting on city office building in background showing partnership success of business deal. Concept of teamwork, trust and agreement.

A spin-off success

Double exposure image of many business people conference group meeting on city office building in background showing partnership success of business deal. Concept of teamwork, trust and agreement.

In April 2013, Argos Wityu decided to acquire four entities that the Sage Group was looking to separate from. Six years later, after benefiting from the fund’s expertise, all four have been sold as independent companies of which their leaders are proud. Illustrating this are Philippe Almouzni, CEO of I’Car Systems, and Françoise Farag, CEO of Salvia Développement, who look back at their experience working alongside Argos Wityu.

“At Argos, we have always liked the challenge of a complex or atypical situation, as long as there is potential and the assets are healthy,” said Karel Kroupa, managing partner of the investment fund. This was certainly the situation for the four Sage Group entities sold to Argos Wityu in April 2013 (Akanea, Aytos, I’Car Systems and Salvia Développement), so that the British software company could refocus on its core business of non-vertical ERP software.

4

entities turned into fully independent companies

30%→48%

increase in the FTE share of R&D personnel

8

build-up acquisitions made

+90%

increase in total revenue in 6 years

Double exposure image of many business people conference group meeting on city office building in background showing partnership success of business deal. Concept of teamwork, trust and agreement.

What we
saw

  • A complex case with four simultaneous spin-offs: four companies with high potential as independent entities but tied to their parent company
  • Profitable companies generating significant revenue but with limited growth and outside the strategic focus of their parent company
  • Strong market positions
  • Experienced and motivated teams

What we
did

  • Made the four companies completely independent
  • Invested massively in expanding the workforce, especially in R&D
  • Made build-up acquisitions (eight in all)
  • Revived each company’s growth in France and/or international markets
01

Four simultaneous spin-off transactions

What was Argos Wityu’s goal? To help companies that were no longer part of Sage’s plans to recover their strategic and operational autonomy.

“We simultaneously carried out four spin-off transactions with a high degree of complexity and a broad diversity in their respective markets,” said Karel Kroupa, adding that Argos Wityu was the only fund “able to make Sage a single offer for all four businesses, since other potential buyers were only interested in one entity.”

At the time of their acquisition from Sage, the three entities (excluding Akaéna) were generating total revenue of €33m. They employed about 500 people in France and Spain. Working closely with the company leaders and their teams, the investment fund then began rebuilding the three businesses at the same time (teams, brands, strategies, marketing and HR functions, information systems).

02

Collaborating with a fund: an easy choice ?

The management teams of the four companies “wanted the new business adventure to be about development and growth, and not about improving margins and optimising operations, which made it easier to work together,” said Karel Kroupa.

Collaboration was not so straightforward for the company leaders, at least in the beginning. When the fund acquired her company, Françoise Farag, CEO of Salvia Développement, wondered “if the reality would live up to the marketing hype,” since she had never worked with a fund before. She described the experience as a “leap into the unknown”, especially since Salvia, unlike the other three entities sold by Sage, was a business unit and not formed as a company. But her doubts soon vanished. “Argos was the best option; it was the best thing that could happen to us. Argos lets teams in companies grow without interference – that really is their DNA.”

Philippe Almouzni was no more experienced with collaborating with a fund. “I had no previous knowledge and the image I had of investment funds was far from positive. So I didn’t see the arrival of Argos as a fantastic opportunity, at least at first,” he admitted. But then, like Françoise Farag, he was reassured by his first-hand experience. “Argos’ way of doing business was a welcome surprise,” said Philippe. “What I discovered was a fund whose first step was not to talk about optimizing Ebitda but instead about how it could support my company’s transformation strategy, and that made all the difference.”

03

Using innovation to drive growth

One step taken by Argos Wityu was to invest heavily in innovation. R&D staff rose from 30% to 48% of the workforce in full-time equivalents. Longstanding software products were modernised and the companies massively recruited new talent to address new market segments.

The investment fund and the company CEOs set up a new hosting platform independent from Sage to launch a new SaaS offer. They also implemented the shift to a software subscription business model to increase the share of recurring revenue, which rose to 70% of total revenue.

“We invested a lot of money in R&D, for example to create an operational management solution for real estate developers in 2019,” said Françoise Farag. “When we were with Sage, I had presented a potential acquisition to my management, who didn’t see its value. Argos helped us boost our external growth.”

The results came quickly.

04

Accelerating development plans with build-ups

Argos Wityu helps companies grow organically while also enabling them to acquire new companies to expand their product and service ranges. A total of eight build-up acquisitions were made.

These add-ons included I’Car Systems’ acquisition of the Lyon-based software company Altimis, followed by its Spanish and Portuguese distribution networks. The highlight of the collaboration between Argos Wityu and I’Car Systems was the 2018 acquisition of Datafirst, the company’s main competitor. “What impressed me the most while working with the Argos teams was their ability to quickly seize opportunities and make impactful decisions in a very short timeframe,” said Philippe Almouzni. The Datafirst transaction doubled the company’s workforce and revenue, which stood at €32.5m when I’Car Systems was sold to Providence Strategic Growth in the summer of 2019.

The other three companies were also gradually divested. Akanea was sold to the Initiative & Finance fund just six months after the acquisition. The fund had already expressed its interest in the company when Argos Wityu was finalising its deal with Sage. Aytos, a Spanish company, whose revenue had risen from €7.5m to €10.3m in two and a half years, was sold to Berger Levrault in December 2015.

Salvia Développement, the last company sold by Argos Wityu, followed the same virtuous path. In 2016 and 2018, it acquired SRCI and Alteva, respectively, among others. Generating revenue of €11m at the time of its 2013 acquisition, Salvia Développement nearly doubled that figure in six years, posting revenue of €20.8m when its sale to TSS, the European subsidiary of Constellation Software, was announced in September 2019

05

Results due to a collaboration built on trust

“We succeeded in transforming a software company with high potential but mainly addressing the French market into a market leader in France with real growth potential in Europe,” said Philippe Almouzni. “Argos made it possible for us to translate our ambition into a reality by providing the oxygen needed to invest and act quickly.”

He explained, “At Sage, we had to fight for this kind of opportunity for growth, even though I was convinced that we could establish a significant position in France and then expand into Europe.”

Françoise Farag had a similar experience. I take my hat off to Argos for the high degree of trust it placed in us. We received their full support and the benefit of their expertise. On a personal level, working with Argos helped me gain a number of new skills. It is really worth working with a fund that has our best interests at heart,” she said.

Six years after their initial acquisition by Argos Wityu, the three companies have prospered, generating overall revenue of €63m, showing that the fund’s strategy works.

06

What they said

CEO of I’Car Systems

Philippe Almouzni

“When we first met, the way Argos did business unsettled me, in a good way. What I discovered was a fund that did not talk about business plans but instead about how it could support my company’s transformation strategy, and that made all the difference. […] What impressed me the most was the teams’ ability to quickly seize opportunities and make impactful decisions in a very short time frame. […] We succeeded in transforming a software company with potential, but mainly addressing its specific market, into a market leader in France with real growth potential in Europe. Argos made it possible for us to turn our ambitions into reality and gave us the oxygen needed to invest and act quickly.”

CEO of Salvia Développement

Françoise Farag

“Argos was the best thing that could happen to us. The fund enables company teams to grow without outside interference – that’s really their DNA. […] It made it possible for us to step up our external growth. […] I take my hat off to Argos for the high degree of trust their people placed in us. We received their full support and the benefit of their expertise. On a personal level, working with them helped me gain a number of new skills. It is worth working with a fund when it has our best interests at heart.”

07

The offbeat interview of Karel Kroupa,
Managing Partner of Argos Wityu

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