Main Capital buys majority stake in Mach

The Müller-Ontjes family, Mach's former majority owner, will retain a minority stake in the business.

"This is a sector that we like a lot, we have done quite a lot in this sector in the Netherlands and in the adjacent sector of healthcare software," Sven van Berge Henegouwen, a partner at Main Capital, told Unquote. "We have been in contact with Mach since 2016 and always tried to help them from a strategic point of view. Earlier in 2020 we had an update call and things got more concrete as the time was right for the family to take on a majority shareholder." The deal process began in May 2020.

Main Capital has invested in companies that provide software for public sector organisations before, namely in Exellence, SDB and Alfa.

Main Capital deployed equity via Main Capital VI, which held a final close in May 2020 on €564m, surpassing its target of €550m. The fund generally deploys equity tickets of €3-5m but can deploy as much as €20m. Main Capital focuses exclusively on software-based businesses headquartered in Europe.

"This is the fifth investment from Fund VI and we aim to make six to nine more investments with the fund," van Berge Henegouwen told Unquote. The fund is around 20% deployed.

The Mach deal is not currently leveraged, van Berge Henegouwen said. "We did not use debt, to make the process simpler – but we would consider this for add-ons and inorganic growth."

Asked about the GP's plans for add-ons for Mach, van Berge Henegouwen said: "The add-ons will be in the public sector or adjacent sectors. We are open when it comes to size, as long as it furthers the strategic business and product portfolio – so they could be sizeable or smaller. The public sector is nationally focused, so the likelihood is that the add-ons will be in Germany or German-speaking countries.

He added that the firm will seek add-ons in a number of adjacent software services. "We are, among others, interested in HR software and software relating to the Onlinezugangsgesetz – a legal initiative to further the German government's digitalisation efforts towards its citizens – as well as topics surrounding smart cities."

Company
Founded in 1985, Mach assists governmental organisations with digitalisation projects, including paper file conversion, budget management and personnel management. Its client base includes federal and state authorities including the Bundesverwaltungsamt and the states of Saarland, Rheinland-Pfalz, Thüringen, as well as church administrations, educational institutions and NGOs.

Based in Lübeck, Mach has 400 employees and generates revenues of €44m. It generated 2018 revenues of €31.2m and 2017 revenues of €28m, according to its latest accounts.

People
Main Capital Partners – Sven van Berge Henegouwen (partner).
Mach – Rolf Sahre (CEO).

Advisers
Equity – McDermott Will & Emery, Dustin Schwerdtfeger, Norman Wasse (legal); Grant Thornton (financial due diligence).
Vendor – Heuking Kühn Lüer Wojtek (legal); Livingstone (M&A).

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