proAlpha Software AG Investment
| Company | proAlpha Software AG |
| www | www.proalpha.com |
| Initial Investment Date | July 2007 |
| Exit | October 2013 |
| Entry Valuation | 34.5m |
| Exit Valuation | 160m |
| Total Investment | 9.5m |
| Current Sale Value | 41m |
| 2017 Revenue | 65m |
| 2017 EBITDA | 15.4m |
| Initial Ownership | 28% |
| Investment Type | Replacement Capital |
| Seafort Role at Entry | Sole Institutional Investor |
| Co-Investors | Management |
| Multiple at Cost | 4.3x |
| Gross IRR | ~27.6% |
Business Description and Investment Thesis
proALPHA AG is a highly profitable vendor of ERP software solutions and related services primarily aimed at medium-sized companies in its core market Germany. Largest independent ERP software vendor in Germany.
Key Investment Considerations
- Successful management team
- Scalable software platform
- Rapid organic growth, high-margin
- Market leadership and last independent ERP mid-market player
- in-house R and D
- broad customer base with substantial repeat business
Sourcing
The original investment was introduced to Seafort (formerly Beaufort) by Berlin Capital Fund. The distressed venture investor held a minority position in proALPHA of 23.7% After identifying a former employee of proALPHA who was willing to sell his shares, Seafort (formerly Beaufort) finally acquired the blocking minority with 27.6%. The founders of proAL-PHA reacted highly positive after Seafort (formerly Beaufort) outlined its investment approach. Seafort (formerly Beaufort) acquired the company in 2007 at an EBIT multiple of 6.0x.
Post-Investment Value Development and role of Seafort
proALPHA AG has performed exceptionally since then, with EBITDA and revenues in-creasing +100% and +60% in 2013, versus 2007.
- Enlarging customer base and offering new software products
- Build-up of staff
- Technical and functional product development
- Reorganization of the direct sales channel
- Ongoing development of branch specific solutions and the recruitment of new employees ProAlpha got more and more a very well positioned to constantly attract new customers.
Exit and Valuation
Sold in 2013 to a financial investor (Bregal) for 4.3x MOI
The contract to sell proALPHA to Bregal Capital London (family office of Bren-nikmeyer, warehouse C and A) was signed on August 7, 2013. Valuation was nearly € 160m (incl. net-cash). The closing of the purchase was in October 2013.
Out of this purchase price, BO4 I received an amount of € 38,4m after deduction of costs from € 3.2m gross dividend (09/2013), first purchase price payment of € 31.8m after approval of anti-trust commission (10/2013) and - the second purchase price payment of € 6.5m after squeeze-out of minor shareholders. The second tranche was received on 6th of February 2014.