Unity Buyout Fuels Ecko Growth
It’s not often that corporate advisors take on the grind of running a business day-to-day, but that’s what David Hargaden did with Unity Technology Solutions from 2010. He was managing partner at his own accountancy practice through the 1990s before jumping out to BDO to become head of corporate finance from 2001 to 2008. Then came the credit crunch crash, which disabled IT services company Calyx, and in stepped Hargaden and others to pick up the pieces.
He became CEO and in 2016 and Unity sharpened its focus to provision of cloud solutions for enterprises. Turnover growth was modest and in October 2020 Unity bulked up with the purchase of IT Force. This deal increased Unity’s annual revenue in the year to June 2021 to €12.2m from €9.4m in FY20. In August 2022, cybersecurity specialist Ekco, a serial acquirer, announced it was buying Unity, and Hargaden (66) has stayed on as executive chairman.
Consideration for the Ekco/Unity deal was not disclosed. When Unity bought IT Force, the goodwill element of the deal was c.70% of turnover. That basis would have valued Unity at €8.5m based on FY21 accounts, underpinned by EBITDA that year of €1.6m.
Hargaden’s financing of Unity was interesting. Liabilities of €10.3m in June 2021 included €4.5m in investor loans with an annual coupon of 7.5% and repayable before December 2023. A revolving credit facility of €300,000 carried an interest rate of 5.75% p.a. and 3.5% on any amount not drawn down.
Founded in 2016 by Eoin Blacklock and Jonathan Crowe as a cloud back-up and disaster recovery business, Ekco has scaled rapidly across Ireland, the UK and the Netherlands through an ambitious buy-andbuild programme.
Ekco said that the enlarged business
will have over 500 staff and that annual revenue will exceed €100m. Ekco has made several acquisitions over the past year, including Kontex Security and Ward Solutions, and shareholders included venture capital group ACT, Pageant Holdings, and the private offices of wealthy families.
Two months after the Unity deal was finalised, London private equity investor Corten Capital acquired a majority stake in Ekco. Some of the Ekco backers took their money off the table while Blacklock, Crowe, and the senior management team continue to lead the business and remain significant shareholders.
Intelligo Software was a very successful business for directors and owners Padraig Gill (53) and John Kellegher (57), who established the venture with Charles Alken in 1996. The payroll and HR software provider has a leading market position with brands such as MegaPay and MegaHR, and processes c.40,000 payslips per month.
Based in the IDA Business Park in Bray, Co Wicklow, Intelligo employs 67 people and was the Ireland payroll partner for SD Worx for 16 years. In October 2022, SD Worx bought the business, adding to its annual turnover of €858m. The SD Worx group operates in 19 countries, has over 6,500 staff, and ranks among the top five payroll processors worldwide.
Intelligo Software booked a net profit of €810,000 in 2021 and the two directors shared €720,000 in remuneration. Trade debtors doubled year-on-year to €1.1m and year-end net worth was €1.6m, higher when deferred income of €1.1m is included. Balance sheet cash at periodend was €2.3m.
Another payroll provider snapped up by an overseas buyer was Paycheck Plus, which was established in Drogheda in 2005. The buyer in May 2022 was IRIS Software Group, one of the UK’s largest software companies. Founders Anne Reilly (56) and Seamus Reilly (57) established the business in 2009 and the company employed 27 people in 2021. Trade debtors at the end of that year amounted to €310,000 and the company owners shared €365,000 in remuneration and pension contributions.