June 10, 2021
FourNet forges partnership with Palatine
FourNet was founded 16 years ago, when three colleagues and I had a clear vision that we could provide communications technology services and solutions better, and with more care, than the larger competitors in the industry. Throughout our history we have always prided ourselves on being flexible, agile and keeping ahead of the market.
The market has changed dramatically over the last decade-and-a-half since FourNet launched, but never more so than in the last year.
The industry has been significantly disrupted; technological innovation, driven by the necessity of responding to the challenges posed by COVID, has accelerated at a pace never seen before. We have seen the convergence of many areas of IT and communications technology, and the transition to cloud services has been greatly accelerated.
During this time, we have rapidly and organically evolved our product and services portfolio, enabling our customers to quickly and securely adopt technologies that enable them to digitally transform their businesses.
We now believe that the time is right to add some carefully selected strategic capability, through mergers and acquisitions, to meet rapidly evolving customer requirements and continue to improve our service delivery for our customers.
Over the last few months, we have been looking for a new private equity partner to fuel our next stage of growth. I’m pleased to reveal that yesterday evening, we completed on a transaction that brought in Palatine Private Equity to hold an equity stake in FourNet. Palatine PE have a strong track record in backing management teams for growth and have investments in organisations in adjacent sectors to FourNet, with a similar customer set. They also have a strong focus on ESG (Environmental Social Governance) which makes them a great fit culturally for FourNet.
Our new partnership will Palatine keeps us at the forefront of our industry, where we will continue to put our customers first, and to show them, and the rest of the market, how technology, and how FourNet, can help them flourish in a changing world.
Richard Pennington, CEO
PALATINE PRESS RELEASE – issued 10th June 2021
LEADING mid-market investor Palatine Private Equity has acquired a majority stake in FourNet, the award-winning digital transformation and customer experience specialists with clients including 10 Downing Street, the Cabinet Office, HM Treasury and the Bank of England.
Headquartered in Manchester, and with offices in London and Burton-on-Trent, FourNet has annual revenues of £38m 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 won a string of awards in recent years and has also been acknowledged as one of the Best Tech Companies to work for in Britain.
The firm was founded in 2005 by CEO Richard Pennington, Operations Director Frank Jennings, Chief Technology Officer Mike Jervis and Sales Director Steve Tyrrell. Since 2017 it has been backed by YFM Equity Partners, which took a minority shareholding.
The investment from Palatine will see YFM realise their shareholdings and exit the business. Technology sector veteran Iain McKenzie continues as chair of FourNet.
Tech sector veteran Iain McKenzie, who has been Chairman of FourNet since the YFM investment, is remaining in position while Tony Dickin, Andy Strickland and James Painter from Palatine will work with the company going forwards. Tom Hustler was also a key part of the deal team.
FourNet CEO Richard Pennington said:
“Our new partnership with Palatine further positions us as a prime player in the technology sector and we are delighted to be working with their team.
“The pandemic has been a catalyst for significant change in working practices and our industry over the past 12 months and fresh investment will enable FourNet to rapidly meet the changing needs of our customers, many of whom are critical to the UK’s success following the pandemic, and to build and acquire the additional capabilities that our customers require.
“Palatine’s investment will keep FourNet at the forefront of the industry and will also provide the fuel for us to lead further change across the sector, while allowing us to capitalise on the rapid growth in demand for cloud, collaboration and managed service solutions.
Andy Strickland, Senior Investment Director at Palatine, said:
“FourNet is a highly respected, well-managed business with a loyal customer base and we look forward to working with Richard and the leadership team to add further value and power its continued growth at a time of significant public sector investment in Cloud and IT infrastructure.
“We see significant opportunity for FourNet to strengthen its position in the market place as the go-to cloud services supplier to the public sector. Given our strong track record in the TMT sector and in IT, cloud and managed services in particular we believe we will be able to assist management in capitalising on the market opportunity.
“As part of the strategy we will look at selected buy and build opportunities, but we also see great potential for organic growth. We also see a major opportunity to work with management to further develop the company’s already strong ESG credentials, an area where there is ever-increasing awareness and significance during the public sector procurement process. ESG is an integral part of the value-add proposition Palatine brings to the businesses it invests in.”
Palatine has embedded an award-wining and pioneering ESG framework into its value-creation model over the last decade which enables it to work with management teams to measure, monitor and improve ESG outcomes across its portfolio businesses.
The shareholders were advised by investment bank GCA Altium. Palatine was advised by BDO (corporate finance), Gateley (legal), Spectrum (banking), RSM (Tax) and Intechnica (IT). Debt was provided by Kartesia.
YFM PRESS RELEASE – issued 10th June 2021
YFM Equity Partners (YFM) has sold its stake in FourNet, the award-winning digital transformation and customer experience specialists whose clients include 10 Downing Street, the Cabinet Office, HM Treasury and the Bank of England. The secondary buyout deal backed by Palatine Private Equity generates a 6x return for YFM’s investors in less than four years.
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. YFM will 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 £38m 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 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.