YFM Equity Partners (YFM) has sold its stake in FourNet in a secondary buyout deal backed by Palatine Private Equity, generating 6x return for investors in less than four years.
FourNet is the digital transformation and customer experience specialists whose clients include 10 Downing Street, the Cabinet Office, HM Treasury and the Bank of England.
FourNet was founded in 2005 by CEO Richard Pennington, operations director Frank Jennings, chief technology officer Mike Jervis and sales director Steve Tyrrell.
YFM invested in September 2017, to back the four founders and help them continue the strong growth of the business.
In addition to YFM, two founding shareholders, Frank Jennings and Mike Jervis, will also exit the business, with technology sector veteran Iain McKenzie continuing as chair of FourNet.
Headquartered in Manchester, and with offices in London and Burton-on-Trent, FourNet has annual revenues of £38 million and employs more than 100 people. The company has around 200 customers, with a significant number in the public sector.
Reflecting its strong three-year growth rate of nearly 55%, FourNet featured in the Sunday Times Tech Track 100 for 2020, the index of the 100 privately-owned technology companies with the fastest-growing sales. The company has also been acknowledged as one of the Best Tech Companies to Work for in Britain.
Dan Freed, partner at Leeds-based YFM, said: “Four years ago, we backed FourNet as a niche business with a strong reputation in a specialist and rapidly growing market, knowing that, with our support, they could continue to thrive. They are exactly the type of business and management team that YFM looks to invest in from our managed funds.
“Over that time, we have worked closely with the management team to pull together a longer-term plan of how to scale people and processes as they expand. FourNet has delivered strong increases in revenue and profits and been at the forefront of technology change in the market, delivering complex solutions to its impressive customer base.
“There has always been good alignment between us and we’ve really enjoyed working with Richard and the team. The business is now very well-positioned to move on to the next stage of its growth and we wish them every success for the future.”
FourNet CEO Richard Pennington added: “The growth we’ve achieved since the YFM investment has put FourNet at the leading edge of a rapidly developing sector.
“YFM have been a fantastic, supportive and flexible partner who have given FourNet the space to grow in recent years and particularly over the last year.
“As the FourNet team approaches the next stage in our development, we are in an excellent place from which to continue on our current strong trajectory.”
The shareholders were advised by investment bank GCA Altium and DWF (legal). Palatine was advised by BDO (corporate finance), Gateley (legal), Spectrum (banking), RSM (Tax) and Intechnica (IT). Debt was provided by Kartesia.