Tenzing sells CitNOW to Livingbridge; reaps 9.6x return, 74% IRR

The mid-market tech investor, which is exiting the investment made by Tenzing Private Equity I Fund, will continue to back the company via its Tenzing Private Equity Fund II, and companion fund Tenzing Belay I.

The deal for the UK-based provider of front-office software to the automotive retail industry is structured as a control buyout in partnership with Livingbridge, Tenzing co-founder and managing partner Guy Gillon told Unquote.

“We were keen to materially reinvest in CitNOW from Fund II were we to identify a buyer who we and management are supportive of and who, most importantly, shares our philosophy around growth and the significant untapped value in the business,” he said.

Tenzing Private Equity closed its second fund on its GBP 400m hard-cap in June 2020, according to Unquote Data. The equity tickets for the fund are around GBP 20-25m and follow-on capital up to GBP 30m. The fund focuses on fast-growing technology businesses and technology-enabled businesses based in the UK, Ireland and northern Europe. The GP held a final close for its GBP 100m Belay Fund I in November 2021, which focuses on providing capital for existing portfolio companies, whilst allowing the firm to underwrite larger deals. The vehicle has the capacity to invest up to around GBP 150m.

The GP originally invested in CitNOW in February 2018 via its maiden fund, which held a final close on its GBP 200m hard-cap in January 2017, according to Unquote Data.

“Tenzing has invested in CitNOW for four years, and the exit creates a big gain for Fund I,” said Gillon. “The timing was right for that fund to realise this gain. For management, who have been invested in a long-term incentive plan for over four years, we believe this transaction allows them to realise the return for their hard work and creates an opportunity for ongoing management to recommit to another cycle.”

Trade and PE buyers were both considered throughout the Raymond James-led sale process, according to the managing partner. The company was marketed off GBP 15m EBITDA, according to Debtwire. Livingbridge fended off competition from two other sponsors in the final round of bidding, as reported. The takeover is being part-financed by a debt facility provided by Barings, according to Debtwire.

Tenzing has supported CitNOW’s growth organically and through five acquisitions throughout its four-year tenure. Partnering with US-based Quik saw CitNOW expand its global footprint and accelerate US expansion, whilst the acquisitions of Netherlands-based Web1on1, UK-based Reef Business Systems, Dealerweb and Tootle enabled the company to increase the value it provides to clients through additional products and services and increase the reach of its products, according to a press release from the vendor.

Tenzing is currently supporting the team to develop an effective sales process for expanding into Europe, while assisting CEO Geoffrey Page-Morris on special projects to help accelerate growth.

Livingbridge will enable the company to progress its acquisitive strategy in both the UK and Europe, accelerate its solutions roll-out in the latter, and refine its technology and product offering, according to a press release from the buyer.

The GP’s seventh fund held an interim close at GBP 1.2bn in May 2021, according to Unquote Data. The vehicle focuses on acquiring control and substantial minority investments in high-growth, small to medium-sized companies located in the UK, with several investments expected from the firm's offices in Australia and Melbourne. The fund expects to do 20-22 deals over a five-year investment period. The firm’s investment strategy will remain focused on its key sectors, including services, technology, consumer and healthcare and education.

Company
Founded in 2008, CitNOW Group provides software products to franchised car dealerships to improve both efficiency and conversion of sales and aftersales. The suite of software products allow dealerships to digitally engage with a customer at the start of their purchasing journey via video, manage the customer through the sales process and then generate additional revenues and technician workflow efficiencies when the customer brings their vehicle in for service. Since its inception, CitNOW has established itself in the market, with over 13m sales opportunities created, 60m videos processed and over 10,000 dealer installations across 64 countries to date. It is currently the most penetrated vendor of automotive software in the UK market, with approximately 75% of predominantly franchised dealerships using at least one of its products.

People
Tenzing − Christian Hamilton (co-founder and managing partner).
CitNOW Group − Geoffrey Page-Morris (CEO).
Livingbridge − Simon Peet (partner).

Advisers
Vendor and CitNOW − Raymond James, Osborne Clarke, Alvarez & Marsal, PwC Strategy&, Clearwater Debt Advisory, Liberty and Crosslake.
Equity − Livingbridge Software Advisory Board

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• Topics
• Technology
• Exits
• Buyouts
• UK / Ireland
• United Kingdom
• Tenzing
• Livingbridge