DBAG prepares Cloudflight for sale launch late this year

Patrick Costello , Joao Grando and Gustav Hoejmark-Jensen
26 July 2022

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Cloudflight, a German IT services and software consulting company, is being prepped for exit by owner Deutsche Beteiligungs AG, three sources familiar with the situation said.

Frankfurt-based DBAG has appointed Houlihan Lokey to advise on a sale, the sources said. A process could kick off toward the back of 2022, the three sources and a fourth source familiar said.

Cloudflight generates around EUR 24m-25m EBITDA on the back of EUR 100m sales, one of the sources said. The company posted preliminary revenues of EUR 63m in 2021, up from EUR 37m in 2019, according to DBAG's website.

DBAG is aiming to fetch a 20x EV/EBITDA multiple for the asset, one of the sources said. Still, the sponsor's price expectations for an IT services company might be a stretch for buyers given the current tough market conditions, another of the sources said.

Cloudflight was formed in 2019 after DBAG acquired and merged Crisp Research, a German IT services provider, and Catalysts, an Austrian software company, according to Mergermarket data.

Its service offerings cover artificial intelligence (AI), cloud applications and operations, embedded software development, human-machine interface design, and global e-commerce solutions for B2B and B2C customers, according to DBAG's website.

Under DBAG's stewardship, Cloudflight completed a handful of add-on deals in 2021, acquiring Divante, a Polish e-commerce technology firm; Cognostics, a German software firm; and macio, a German embedded software engineering developer. The financial terms of these deals were undisclosed.

Cloudflight's add-on M&A activities "significantly" increased its business and size and grew its headcount to more than 950 employees, up from 350, according to a press release on its website. In 2021, the four companies associated to Cloudflight grew organically by 30% and achieved "beyond average" profit margins.

The company is pursuing a "buy-and-integrate" approach on top of organic growth as it looks to establish itself as a Europe-wide service provider for industrial digital transformation, the press release continues. Its service offerings support companies in evolving their digital processes, products, services, and business models.

Houlihan Lokey and DBAG declined to comment. Cloudflight did not respond to requests for comment.