Keensight buys Smile from Eurazeo

Francesca Veronesi
24 July 2019

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Keensight Capital has entered into an exclusive agreement to acquire a majority stake in Smile, a France-based digital consultant, from previous backer Eurazeo, which is reinvesting in the business.

Keensight, which first invested in the company from 2013 to 2017, will replace Eurazeo PME as majority shareholder. The two private equity firms are investing alongside the management team and some of the company's employees, which together have retained a significant minority.

The deal was sourced in a proprietary fashion; Keensight's relationship with Marc Palazon was pivotal in the execution of the transaction. Keensight and Eurazeo have jointly provided an equity ticket of more than €100m, Unquote understands.

Keensight Capital V, which was closed in Q1 2019 on €1bn, was used for the transaction.

The business will target international expansion and aims to generate 25% of its revenues abroad by 2022, potentially expanding to Germany, England and northern Europe. It will also focus on product development on the consulting side.

The transaction will be supported by a unitranche debt package provided by Capza, Unquote understands.

Previous funding
Andera first backed Smile in 2010 with €3.5m from its €112m Cabestan Capital venture fund. According to Unquote Data, the investment comprised €2.5m in new equity and €1m to acquire a stake from Smile's founders.

Keensight acquired a majority stake in Smile as part of a management buyout alongside existing investor Andera in Q4 2013. Management also took part in the transaction, led by CEO Marc Palazon. Smile bolted on competitor Open Wide in 2015.

Eurazeo then took over in 2017, acquiring a majority stake from Keensight Capital. According to press reports at the time, the deal valued Smile at around €100m, equivalent to 12x the company's EBITDA.

Under the Eurazeo ownership, the company completed the strategic acquisitions of Virtua, Adyax and SensioLabs.

Company
Founded in 1991, Smile manages digital projects on open source technologies, operating in digital technology, the Internet of Things, embedded systems, IT infrastructures and business apps. Its clients are large corporates.

Based in Paris and with offices in seven countries, Smile employs 1,700 people. With an annual turnover of €102.5m in 2018 and around €130m in 2019, it predicts €200m revenues in 2022.

People
Keensight Capital – Philippe Crochet (managing partner).
Smile – Marc Palazon (chairman).
Eurazeo – Pierre Meignen (managing director).