€25m Deal Creates Irish IT Giant
John Purdy (60) is one of Ireland’s leading entrepreneurs in the IT services space, founding ErgoServices Ltd in 1993 and annual revenue topping €100m as the company enters its third decade. He stepped back to nonexecutive chairman role in September 2021, handing the CEO baton to Paul McCann, the former managing partner of Grant Thornton. “Less of the leader on the pitch and more as a coach on the sideline, I remain committed and passionate about Ergo and will do all I can to ensure we continue to grow, evolve and innovate,” said Purdy.
Ergo had turnover of €87m in the year to March 2021, and the January 2022 acquisition of IT services peer Asystec pushed it towards the €150m mark for this year. Though the deal was a takeover, it was also a marriage, with Asystec principals Les Byrne (chief business officer) and Aonghus O’Neill (chief revenue officer) now in leadership roles with Ergo.
The Ergo/Asystec deal created the largest privately owned Irish IT services company in the country. The CCPC raised no objections, on the basis that combined market share would be under 15% in activities such as IT consultancy, outsourcing services, and reselling hardware and software products.
Asystec was a relatively quick win for Byrne (49) and O’Neill (44). Byrne established the venture with Brendan McPhillips in December 2010, with O’Neill becoming a director in 2014. McPhillips exited the Asystec board in March 2021 after the company acquired c.90% of his shareholding in the parent company. As of July 2021, Les Byrne owned 63% of the venture and Aonghus O’Neill owned 32%.
Byrne is a sales professional from Shannon whose early career spanned a recruitment agency and a computer reseller before joining EMC in 2006. Fed up with the road warrior toil, he set up Asystec with McPhillips, a former sales colleague. Their target niche was data storage and back-up
security, with a high level of service demanded by corporates. Data management and data analytics followed, and Asystec established a reputation for expertise in Amazon Web Services, Dell Technologies, EMC storage and VMware. That appealed to Ergo, whose strengths lie in Microsoft Azure and Hewlett Packard Enterprise solutions.
Operating company Asystec Holdings had turnover of €40.4m in the year to January 2021, which was €3m less than two years earlier. The director shareholders shared €1.5m in dividends and period-end balance sheet cash was €6.7m. Perhaps because growth had tapered off, Byrne decided teaming up with Purdy would be a good idea. Ergo described the transaction terms as a “€25m deal”, and McCann said the ambition is to scale up Ergo to c.€250m turnover over the next three to five years.
Ergo followed up in November 2022 by acquiring BoatyardX, a custom software development company based in Dun Laoghaire. Established by Gareth Lyons and Brian Barter in 2018, BoatyardX has expertise building cloud-based custom software for clients in fintech, payments, e-commerce and IoT sectors.
BoatyardX services are delivered through teams based in Dublin, ClujNapoca in Romania, and Colombia. Gareth Lyons (51), chief innovation officer at Mastercard from 2010 to 2018, is the controlling shareholder at Shipyard Technology Ventures Ltd, which owned BoatyardX. Lyons raised €10.5m equity capital for BoatyardX, which had start-up losses €4m at the end of 2021.
Shipyard says its purpose is “to create or co-create great companies and to help large corporations sustain or extend their advantage through new ways of innovating”. In an accounts filing the company declares: “Shipyard believes that the creation and operation of successful companies can be systematised. There is a significant opportunity to create real value in a variety of industries, with limited investment to start with, and sell these businesses to corporations to augment their innovation and product development capabilities.”
Brian Barter, managing director of BoatyardX, commented: “Our teams in Romania, Colombia and Ireland are the foundation, providing access to great talent and delivering real value to clients.”