Northedge sells majority stake in CTS to Marlin Equity

Ero Partsakoulaki
09 January 2023

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Lower mid-market firm NorthEdge has sold a majority stake in Cloud Technology Solutions Group to US-based sponsor Marlin Equity Partners.

The vendor will reinvest into the Manchester-based CTS from both its exiting vehicle, NorthEdge Fund II, and NorthEdge Fund III, according to a press release from the vendor. Fund II closed on GBP 300m in March 2016, while Northedge III raised GBP 250m in December 2020.

Northedge took a stake in the cloud infrastructure company in 2018 via an MBO to accelerate growth through complementary acquisitions.

Mergermarket reported in July that a sale process was expected to launch in 4Q22, run by Arma Partners. The asset was expected to be marketed off 2021 EBITDA of GBP 5m with a targeted EV of around GBP 150m, as reported.

The company is aiming to further strengthen its position in the European market and continue to invest in CloudM, according to the press release. CloudM is a software provider for Google Workspace and M365, enabling over 200 partners to migrate, automate, archive and backup data across both platforms.

Marlin has over USD 8.5bn in capital commitments under management and its Marlin Heritage Europe Fund II held a final close at EUR 675m in June 2021, against its EUR 650m target. The fund will continue its predecessor's strategy and invest in middle-market companies generally located in Europe, while also seeking to make investments in industries where Marlin has developed extensive domain expertise, including software, technology, healthcare and tech-enabled business and financial services, according to Unquote Data.

Company
CTS helps customers adopt advanced digital business models with improved data analytics and productivity suite management. It is comprised of two market leading businesses: CTS, which works with organisations to modernise their technology stack, providing consultancy, implementation and managed services for both the Google Cloud Platform and Workspace; and CloudM, a provider of proprietary migration and management software for Google Workspace and O365.

People
Cloud Technology Solutions Group − Tom Ray (CEO).
Marlin − Mike Wilkinson (managing director).
NorthEdge − Jon Pickering (chief investment officer).

Advisers
Vendor − Arma Partners (corporate finance); Squire Patten Boggs (legal); PwC (financial due diligence); Altman Solon (commercial due diligence).