Montagu-backed ITRS plans technology acquisitions to grow capabilities - CEO

02 February 2021 - 04:21 am UTC

By Liz Salecka

ITRS, a Montagu-backed software company, plans a pipeline of technology company acquisitions to grow its capabilities, CEO Guy Warren said.

 

The UK-based company provides its clients with real-time monitoring and analytics software for both their physical and cloud-based IT environments to ensure operational resilience, he said. It is looking for targets to expand its monitoring and big data analytics capabilities, he said.

 

It will buy one to three companies every year, but does not have a specific number of acquisitions in mind, Warren said. Acquisitions will be location-independent and driven by the technological fit, he said. However, the company wants to expand internationally and is likely to make at least one acquisition in North America, he added.

 

All acquisitions will be funded from its strong cashflow and debt facilities to take advantage of the current low interest rate environment, he said. The company generates annual revenue of about GBP 25m and has a 40% revenue margin, he noted. It has no fundraising plans, he added.

 

ITRS is relying on its own internal dedicated team to source potential targets and Montagu will also present them with ideas, Warren said. It will use external legal and financial advisers to handle the acquisitions and their selection will depend on the location of the targets and tasks involved, he added.

 

The company, which has been PE-owned since 2017, was recently bought by Montagu following the exit of majority investor TA Associates, which has retained a minority stake. The rest of the company is owned by its management, Warren said.

 

Montagu was unavailable for further comment at the time.

 

ITRS wants to buy revenue-generating technology companies with turnover of GBP 5m-GBP 20m, he said. These companies are likely too small to attract PE investment and may be open to becoming part of a larger organisation, he noted. It will also look at larger targets with turnover of GBP 20m- GBP 40m, and will also consider mergers, he added.

 

It is unlikely to acquire a distressed company because of the time taken to fix any underlying issues, he said.

 

ITRS is looking for acquisitions to expand its infrastructure (network and services) and application monitoring capabilities, he said. It also wants to build up its capacity planning products to provide companies with greater visibility into their entire IT estates and help them understand where applications are constrained, he added.

 

The company is also particularly interested in acquiring new root-cause analysis technologies to help enterprises identify the root cause of IT problems and act to avoid them in future, he said.

 

The company, which is actively looking to recruit specialist resources, wants to ensure that it retains personnel brought in via acquisitions to continue developing the secured technologies, he said. It also places value on the new customers brought in and will seek to cross-sell additional products to them, he added.

 

ITRS has witnessed strong positive growth since the COVID-19 outbreak as more companies have sought to take greater advantage of its monitoring and data analysis capabilities to support increasing amounts of online trading, he said. It continued to witness 11%-19% revenue growth throughout 2020, he added.

 

The company has also secured a number of significant new contract wins, including one major Asian corporate, which it met prior to the outbreak and subsequently onboarded remotely, Warren said. It also secured and remotely onboarded a significant new Middle Eastern customer, which it was unable to meet with face-to-face, he added.

 

ITRS made three acquisitions following the TA Associates investment including NV-based Uptrends, which brought in a web site and web performance monitoring solution as well as a substantial new customer base, he said.

 

The company was set up in 1997 to cater for the capital markets and services nine of the world’s top ten investment banks, Warren said. It has also started servicing other sectors including telecoms and healthcare, and this diversification will continue as it grows its business, he said. It has about 300 employees and 3000 customers globally, he added.