Family Trust Investor buys AlphaQuest

AlphaQuest CEO Christian Wagner is one of the company's two previous shareholders, and will retain a significant stake in the business.

The GP secured financing for the deal from a local bank.

"The deal was structured via an official auction process, which took around six months," FTI partner Florian Schepp told Unquote. "We were competing with a lot of financial investors." 

Schepp said the GP's value creation strategy is centred around buy-and-build. "We are already in talks with several smaller and bigger companies." He added that the IT service sector is a key market for such a strategy: "It's a very fragmented industry and it makes sense for a smaller company to join a bigger group. Clients appreciate one-stop shops. And when it comes to bigger companies, the customer acquisition is easier – they have a bigger network, so it's easier to generate new sales. From the risk perspective of a larger client, if a company consists of a group of 15 highly specialised data scientists, for example, a large project might take up half of the staff. But with a bigger organisation, bigger clients can trust you from a risk perspective and it makes sense for them to hire bigger groups. That's why buy-and-build makes sense in the sector."

FTI invests in DACH-based companies with revenues of €5-75m.

Schepp told Unquote that the deal is the third from the firm's debut fund. "We closed our first fund on €30m in mid-2018 – it's small for a normal fund but we have very low concentration limits, so we can invest a third of the fund in single transactions and write up to €10.5m equity cheques. We have two co-investment lines with our biggest LPs, one is an institutional fund-of-funds programme and one is an individual high-net-worth individual."

"We are in the market pursuing opportunities in companies that are profitable, but in special situations, such as companies that are still profitable but not as much as they could be," he added.

Schepp told Unquote that the fund still has room to make investments before full deployment. "We are planning to make one more platform investment and maybe one smaller deal; then the fund will be fully invested and we will draw on our co-investments."

Company
Ulm-based AlphaQuest is an IT consultancy firm that provides specialised services in data and business analytics. The business also offers software implementation advice. Founded in 2001, the company has 50 employees and generates revenues of €5m.

People
Family Trust Invest – Florian Schepp (partner).

Advisers
Equity – Oppenhoff & Partner (legal); Gütt Olk Feldhaus (legal); AC Christes & Partner (financial due diligence, tax); Bluemont Consulting (commercial due diligence).

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• Topics
• Buyouts
• DACH
• Industrials
• Germany