Efex sells majority stake to Advent Partners, hungry for M&A

Managed IT services provider efex has changed hands, with Alceon Private Equity selling its share in the business to fellow Australian private equity firm Advent Partners.

Alceon took a 50 percent stake in efex for close to $30 million at the end of 2021, with efex founder and CEO Nick Sheehan retaining a 50 percent share. The investment was Alceon's fourth acquisition for the year and its first in the managed IT services sector.

Now, Advent Partners – who counts a smart building technology company and a developer of cloud-based property management software among its investments – is taking a majority stake in the business.

The deal enables Alceon to “cycle out, which is very normal almost four years into their investment, and a good opportunity for them to return some money to investors,” Sheehan told techpartner.news.

“Advent will be seeking to supercharge the growth, back me, back our leadership team and back our strategy. There’s no change other than a new partner who's invigorated for the next part of the journey.”

“I want to still run the business”

Sheehan and Alceon enlisted investment bank MA Financial Group (formerly Moelis Australia) to run a global search for the next investor in the company. The founder spoke with firms from Japan, Australia and the United States, among other locations.

“The key thing for me was I want to still run the business and grow the business,” he said.

“We looked at a bunch of different opportunities. Some of those were strategic buyers, some of them were private equity firms from Australia and firms from overseas.”

"I started this business 12 years ago and I want to see the journey through and I really enjoy what I do. There were people that wanted to acquire 100% of the company but I wasn't interested in that.

“What I was looking for was a partner that understood both the strategy and the market.”

Sheehan said Advent was a “standout”, talking up its “really good history” in investing in software businesses.

“They love [efex’s] regional play, they love managed services, they love cyber and AI and what we’ve done to productise the business in those places, so they’re very supportive partners,” Sheehan explained.

“We had a very good relationship with them from very early on [in the process], and in the end they won the deal, which was excellent for all parties, because they were our preferred party.

“Although they’re [now] a majority owner, I'm still a significant shareholder, still the CEO, still on the board, still running the business and still running the strategy.”

Hungry for M&A

Sheehan said the company is going to go “even harder and faster” with M&A, enabled by a "much bigger balance sheet".

Over the last decade, efex’s acquisitions reached double digits, including Panaquip, Think Office Technology, Cloud Copy Click, BMS Group, Logic Plus, In Touch Office Technology, Aish IT, WorldMark Corporate Consulting, Wyscom, Medihost Solutions and, most recently, Datcom.

“I've got a long list of people we're talking to in the market that we want to keep acquiring,” he told techpartner.news.

“We've got a real mandate to continue to acquire businesses; acquiring really good regional and metro managed services providers that have got good capability and great talent in verticals that we love – so that's what the next phase of our business growth is going to look like.

“We're obviously thinking about places [we don’t operate in currently] like Perth and New Zealand.”

“We've got 24 locations at the moment and we want to get to 50 locations by 2030, so we've got really big goals that we want to achieve and Advent will be paramount to helping me drive that strategy.”