IS Group, a subsidiary of KPN, took over Net Ground, supplier of managed hosting- and cloud services, at the beginning of this month. The transactions was guided by M&A consultants, lawyers and financial advisors of seven agencies: Capitalmind, Accuracy, JSA Consultancy, Cleber, Palthe Oberman, Hogenhouck and BarentsKrans.
The cloud market is the fastest growing segment within the IT-industry. The exact size is discussable, because various analyst come up with different estimations – but, they all acknowledge a clear trend: strong growth. According to recent research by The METISfiles, the Dutch market for public cloud services has grown with an annual average of 29% between 2011 and 2016. The Dutch business is expected to spend €1,2 billion on SaaS, PaaS and IaaS services in 2016.
The growth is not only visible at the top of businesses – also small to medium-sized businesses are rising strongly in cloud computing. A different research, which was performed by Odin and strictly focusses on the SMEs market – estimated the SMEs cloud market is worth €844 million, the average spending the upcoming years will increase per year with 12% – to 1,2 billion in 2018. IaaS, the biggest segment, is at the moment worth €340 million and will grow to €475 million in 2018, since SMEs are switching from in-house servers to hosted servers.
In the light of this growing market, cloud has become one of the most important strategic priorities for ICT companies. Pim Bilderbeek, partner at The METISfiles, recently said: “The Dutch market for generic telecom- and IT-services is under pressure because of changing consumer behaviour and the rise of new business models. Cloud is one of those new business models. No self-respecting ICT company can afford to ignore a market of over €1 billion.”
Similarly for KPN, with over 18.000 employees the biggest ICT organization in our country. KPN appointed cloud as one of the most important growth areas of KPN Zakelijk, a business unit which serves corporates, SMEs and entrepreneurs. KPN extended its business the past years by organic growth as well as two big recent acquisitions. KPN bought in August last year Argeweb, known for as one of the most successful hosting companies of the Netherlands, and in July it bought IS Group, one of the biggest suppliers of managed hosting- and cloud services.
Under the wings of KPN, IS Group has completed the first take-over. At the beginning of this month IS Group bought all the shares of Net Ground from Netmen, the former shareholder of the IT-company from Nootdorp. “The take-over and integration of managed hosting- and cloud suppliers is an important part of our strategy to expand our market leadership”, says Jan Willem des Tombe, CEO of IS Group. “With this take-over of Net Ground we further expand our scale and market reach and we can help our clients even better with the transition to the cloud.” Clients of Net Ground are among others Linda, SEOshop and other SME companies.
The agreement between both parties was put on the right track by merger- and acquisition specialists of seven external agencies. Buyer IS Group was advised by Capital Mind on financial terms. The team existed of Ron Belt (Managing Partner) and Marleen Vermeer (Manager). Transaction-support, including commercial due diligence activities, was guided by Leontine Koens-Betz (Managing Partner) and Gijs Siecker (Manager) of Accuracy.
JSA Tax Consultancy, a consultancy firm from Rotterdam specialized in fiscal guidance of M&A transactions, delivered advice by Rowdy Schouten. Two law firms guided IS Group with legal advice and support: Cleber (focus on legal) and Palthe Obermand (focus on HR aspects). The team of law firm Cleber working with of seven lawyers operating from Amsterdam, consisted of Bart Voorvaart, Sjef Bartels and Carry Dullaart.
For Accuracy, the guidance of IS Group meant return to familiar territory – the M&A consultancy firm advices the IT company in the take-over of WideXS (June 2014) and NXS Internet (June 2013). “As Accuracy we are very content we could successfully support IS Group and therefore KPN again with our transaction- and financial expertise in this sector, in order to strengthen the position on the Dutch cloud computing market,” says Gijs Sieker, active at the organization since October 2012. Capitalmind can also praise themselves with a long-term cooperation with IS Group. Belt says: “Because of our long-term relation with IS Group and our knowledge of the hosting sector, we were able to advice IS Group in their next step of the ‘Buy & Build’ strategy, to remain market leader in Cloud Computing and IT services in the Netherlands.”
Seller Net Ground, founded in 2000 by two enthusiastic network specialists, was assisted in M&A field by Hogenhouck, a boutique from The Hague which supports companies in buying and selling activities. The deal team was guided by Rik Stikkelbroeck and Mark van Beusekom, the two Managing Partners whom founded the company in 2007.
“As Hogenhouck we experienced the cooperation with the founders of Net Ground and colleague advisors pleasant and professional. From the moment of approach by IS Group, the clients were very professional and because of the clear agreements and clear management of the expectation towards all the involved parties, this transactions went very prosperous. The result is satisfying for all parties”, said Stikkelbroeck.
Legal support was delivered by Michiel Martin, Managing Partner at BarentsKrans and former lawyer at Simmons & Simmons.