NCC Holdings



Investment Date:May 1999Exit Date:April 2003
Investment Type:Buyout from the National Computing CentreExit Type:Secondary
Sector:Escrow solutionsEnterprise Value:£28m


 

 

Business Description
  • NCC Group provides independent software escrow solutions and associated services which enable its corporate clients to realise the full benefits of IT and to manage the associated risks. Software escrow ensures that business-critical material or source code is protected and accessible should anything happen to a key supplier or developer
Investment Rationale
  • NCC’s escrow business was the UK market leader in the rapidly growing market of software source code escrow
  • Strong forward visibility of revenues as escrow contracts typically have a quasi annuity characteristic, with an average contract life of 7 years

Strategy/Value Creation
  • The buyout from the National Computing Centre, a government sponsored membership organisation was not straightforward and ECI worked through a number of separation issues
  • Sales process improvement led to significant organic growth for the escrow product
  • Changes implemented to the pricing of the escrow product improved margins substantially
Performance
  • NCC Group tripled its profits within four years which was achieved in a poor general environment for most IT based companies during the period 2000-2003
  • Employment growth in the group went from 29 to 150 during the four year investment
  • Sold to Barclays Private Equity for £28m representing a return of 6.6x cost and a 69% IRR and the business was subsequently floated on AIM

 


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quote Structuring the original deal was complicated, but once we had worked through this, we were left with an excellent, focused, core business. The sale valuation reflects the rewards that can come from tackling ‘difficult deals’."

ECI’s Tim Raffle on NCC Group

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