Epicor has announced that CVC has acquired a “significant ownership position” in Epicor from Clayton, Dubilier & Rice (“CD&R”). The announcement indicates that the deal falls short of being a majority owner. But it is unclear where the balance of shares lies. The deal saw both investment companies having an equal number of board seats. Though Jeff Hawn, Epicor Chairman and CD&R Partners will remain as Chairman. The financial terms of the deal were not disclosed.
In 2014, CVC looked to be on the verge of acquiring Epicor from Apax Partners for $3 billion. That deal didn’t go ahead, and Apax eventually sold the global ERP vendor to KKR in 2016. KKR sold the firm to CD&R in 2020. Now CVC has its long-awaited stake in the business. CVC has invested through CVC Capital Partners IX.
Steve Murphy, who has been the Epicor CEO since 2017, will remain in the role. He commented, “Our customers and their ambitions are the focus of what we do as we work to provide the most innovative solution sets possible. CD&R’s support and partnership has been invaluable as we have accelerated the growth of our business, invested significantly in our portfolio and released a number of next-generation, cloud-ready products. We look forward to working with CVC as we continue to grow our platform capabilities, with a keen focus on better serving our dynamic customer base.”
Epicor progresses under CD&R
Under Murphy’s leadership and with the support of CD&R, Epicor has continued to grow both organically and inorganically. Acquisitions have been mainly tech-focused, unlike under APAX, when they acquired several ERP vendors. The most recent acquisition was that of KYKLO, a leading provider of Product Information Management systems and an Epicor partner. Since the CD&R acquisition the company surpassed $1 billion in revenue and now has 23,000 customers in over 150 countries.
The firm has honed its focus further on the “Make Move and Sell economy”. With solutions for industry sectors such as manufacturing, distribution, retail and services. It has seen consistent 45% growth for its SaaS business and transitioned to a cloud-first company. Though there are still many customers using its legacy software.
In May, at Epicor Insights, it unveiled an integrated portfolio of AI and data management capabilities. Including Epicor Prism and Epicor Grow AI, which is embedded across the Epicor Industry ERP Cloud.
Jeff Hawn, Epicor Chairman and CD&R Partner stated, “When we invested in Epicor nearly four years ago, there was an attractive opportunity to build on the company’s strong foundation and to create an industry leader focused on best-in-class enterprise SaaS. Epicor has grown to become a preeminent global platform, led by a fantastic management team which has delivered more value for customers and organizations worldwide.
“We are confident that by leveraging our collective experience, we can continue to unlock Epicor’s potential. Our continued partnership highlights the conviction we have in this next chapter, and we are enthused to continue to support Epicor’s growth with the experienced CVC team.”
What is next under CVC + CD&R
Does this mean more investment for Epicor to continue its growth. Investors from CVC made the following comments.
Aaron Dupuis, a Managing Partner at CVC, commented, “We are thrilled to partner with Steve Murphy and the Epicor management team, along with CD&R, to support the company and its growth plans. Epicor has developed a differentiated value proposition based on its industry-leading SaaS product portfolio and demonstrated commitment to customer service excellence.”
Sebastian Künne, Senior Managing Director at CVC, added, “We look forward to enhancing Epicor’s next chapter of growth with further SaaS migration and geographic expansion into international regions while continuing to drive product innovation that will benefit Epicor’s many valued customers, partners and employees.”
Harsh Agarwal, CD&R Partner, said, “Steve and the rest of the management team have built a tremendous organization at Epicor. We look forward to working with CVC to drive Epicor’s next phase of growth, while supporting the company’s culture that is essential to its success.”
It seems likely that Murphy will now have additional funds to grow the business. Overall though, it seems as though the strategy of cautious expansion and investment into the product remains the same. Will this announcement see Epicor investing in new countries or expanding its presence in countries where it has a limited presence? Its cloud-based solutions are sophisticated. The big question is whether Epicor will look to target larger enterprises, which Murphy indicated he wanted Epicor to do a few years ago.
Enterprise Times: What does this mean?
For CD&R, the firm appears to have spread the risk and may have realised some of its investment in Epicor. Over the last four years, the company has grown. But as no valuation was given as part of this deal, it is unclear what the part exit means. The bigger question is how long it will remain invested and what is the exit plan now? Will it look to stay for another four years?
