Ufenau's Swiss IT Security buys AV-Test

The deal marks the company's 15th bolt-on during the investment period and its ninth add-on in Germany, according to a statement.

The add-on is financed by a mixture of debt and equity.

Asked about the buy-and-build strategy, Marinus Schmitt, partner at Ufenau, told Unquote: "We acquired the relatively small cybersecurity company in November 2017 and the idea was to form a leading IT security service group throughout the DACH region. We aimed to geographically expand the group and provide the full set of IT services."

Ufenau invested in Swiss IT Security via Ufenau V German Asset Light, which held a final close on €227m in October 2016. The fund generally invests in DACH-region companies with revenues of €15-150m and aims to grow its portfolio companies via buy-and-build strategies.

Schmitt added that the IT security market offers plenty of opportunities for buy-and-build. "The market is very fragmented – there are a lot of very excellent niche players. But a lot had problems, such as the fact that they needed to be a certain size to comply with large customer needs. Or the customer also needed services that the company did not offer – you need corresponding services and cross-selling."

"We doubled the size of the company in January 2018 with the first add-on, expanding to Germany," said Schmitt. "We made three add-ons in 2018, then five in both 2019 and 2020." These included Switzerland-based Keyon, which Swiss IT Security acquired in July 2020.

"The market is very fragmented, so we could probably make another 15-20 add-ons easily," he said. "But we are currently working on the pipeline and intend to do one to two more deals in the next six months."

Swiss IT Security now employs 500 staff. It generates revenues of around CHF 115m following its latest add-on; the company reported revenues of CHF 10m when Ufenau invested in 2017, according to a statement from the GP issued in October 2020.

Unquote sister publication Mergermarket reported in December 2020 that Ufenau had mandated Stifel to sell Swiss IT Security following inbound interest for the company, with the sale expected to begin in Q1 2021. However, the report added that the process could take longer to begin, since the company is continuing its buy-and-build strategy. The report added that the company generates EBITDA of more than €20m.

Company
Founded in 2004 and headquartered in Magdeburg, AV-Test provides IT security and antivirus research services. The company tests and certifies antivirus software and Internet-of-Things devices. The business employs 30 people.

People
Swiss IT Security – Philipp Stebler (CEO).
AV-Test – Andreas Marx, Guido Habicht, Maik Morgenstern (managing directors).
Ufenau Capital Partners – Marinus Schmitt (partner).

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• Topics
• Expansion
• DACH
• Technology
• Build-up
• Acquisition finance
• Germany
• Switzerland
• Ufenau Capital Partners