Trustmarque completes £43m MBO

Equity house Dunedin replacing LDC

Management at Trustmarque Solutions (TMS) have completed a buy-out of the business for £43m with the financial backing of mid-market private equity specialist Dunedin.

The MBO was headed by CEO Scott Haddow and sales and marketing director Angelo di Ventura, a pair that were brought on board by previous VC partner Lloyds Development Capital in 2009 to transform operations.

In a statement sent to The Channel, Haddow described Dunedin's investment as a "milestone" in the firm's "evolution".

"Trustmarque has developed significantly over the last four years. Our ambition now is to cement our position as an independent technology service provider, and trusted adviser of choice for blue chip and large government enterprises," he added.

Haddow rocked up at TMS back in February 2009 to replace Ross Miller, who led an 2006 MBO for £30m, with a £10m equity investment from LDC and support from some banks. di Ventura joined Haddow three months later.

Miller was removed as sales faltered, and LDC wanted a team to transform TMS from a reseller that was highly reliant on software licensing in the public sector to a services-based organ with a portfolio of commercial customers.

Some would say that is still a work in progress but results are heading in the right direction - in the last set of financials for fiscal '12 ended 31 August, turnover increased 14 per cent to £131.3m from £115.3m.

Gross profit grew 15 per cent to £15.9m up from £13.8m in the previous fiscal, and services and solutions accounted for £7.1m of gross profit or 45 per cent of the overall firm's gross profit.

A "strategic decision" to go on a recruitment drive saw headcount go up to an average of 169 in the year and contributed to a 23 per cent hike in salary costs to £7.4m, and was the "main reason" why operating costs went up 21 per cent to £11m from £9.3m.

Operating profit was up to £4.95m from £4.5m, net profit was £3.82m compared to £3.39m in the previous twelve months.

It is essential that channel firms - including TMS - are able stand on their own feet without relying on compensation from vendors, msny of which are constantly chipping away at the fees partners can make.

TMS employs 180 staffers across three sites that also include Bracknell and Edinburgh. It sells to over 1,200 clients including RBS, Lloyds Banking Group, HMRC, NHS Trusts, the MoD and MoJ.

Dunedin's portfolio of mid-market firms include Red Commerce, a global recruiter of SAP techies and consultants, and logistics firm CitySprint.

Investment will allow TMS to speed up transformation and potentially diversify through acquisition. TMS's last acquisition was in May 2011 when it took over cloud minnow Nimbus Technology Systems, a ten man band that sells to mid-market customers.

Mark Ligertwood, partner at Dunedin, said "We share [TMS management's] vision for the continued transformation of the business and look forward to working with them".

TMS was founded 25 years ago and was Microsoft's first Gold partner in the UK. ®