Queen’s Park Equity (QPE)-backed software development and digital transformation firm One Beyond’s latest acquisition – Hungarian software developer JayStack – has brought revenues to nearly three times that of when the private equity firm invested in December 2020, QPE managing partner Jose Rodriguez told PE Hub Europe.
One Beyond’s revenues are now more than £25 million ($29 million; €29 million) and approaching £30 million.
“It was single-digit millions when we got involved,” said Rodriguez. “It has been very fast acquisitional and organic growth since we got involved. We have almost trebled our revenues in less than two years.”
One Beyond helps firms to digitise their businesses. It builds end-to-end software for firms or provides support teams for internal digital transformation groups. Most of its clients are blue-chip UK firms – it provides services to over 200 corporate clients in the country. It has worked with companies such as the bakery chain Gail’s, publishing and education company Pearson as well as parts of the National Health Service.
“It’s a fast-growing market, because every corporate – everybody to be honest – is looking at how they can transform their business into the digital era,” said Rodriguez. “And they’re investing heavily in that digitalisation.”
The purchase of Budapest-headquartered JayStack in late August from its founders will help One Beyond meet that demand, said Rodriguez. It adds a team of nearly 100 engineers, to take One Beyond’s headcount to around 320. The JayStack deal was the second add-on for One Beyond, after the £12 million purchase of Spain’s GuideSmiths in March 2021, which added around 50 people in Spain to the group’s headcount.
JayStack founder Péter Zentai stayed invested and became chief technology officer of One Beyond, while some angel investors cashed out. The size of the deal was not disclosed.
While One Beyond has employees in the UK, Spain, Hungary and Romania, in terms of clients, the firm’s focus is on the UK.
“We do have a few international clients outside of the UK which we serve,” said Rodriguez. “To be transparent, we have more demand for our services from our existing clients and firms within the UK than resources. This is a common theme. There’s this huge supply imbalance in this particular sector. Even though we want to help all the corporates in other parts of the world, the demand for UK services is quite large still.” This trend will last for the “next few years”, he added.
The company is still looking for acquisitions, either inside or outside the UK. “The acquisitions may bring clients from overseas, which will be hugely attractive,” said Rodriguez.
As well as digitising businesses, One Beyond helps businesses upgrade existing software.
“We have larger businesses that have highly profitable areas that are still running on legacy software that still works but is not adequate for the new environment in terms of cybersecurity, risk profile and just, basically, reliability,” said Rodriguez. For some of these companies, he added, the risk of not investing to replace the legacy software is “huge”.
Against the clock
Such is the demand that while Rodriguez points to companies such as Scott Logic and BJSS as offering similar services, “they’re not direct competitors in the sense that the market is so vast”, he said. “It’s not that we’re competing with them for the same contract – it’s that they operate in the same space.”
Instead, Rodriguez said decision times can be the biggest obstacle to new business. Making an investment decision to either replace software or invest in a new product can take a long time, he said. “People try to do it in-house – sometimes they fail and then they come back to us. Internal teams are the biggest competitor the sector has, or we have at least. It’s not that we are in this hugely competitive market going for the last piece of margin.
“These are multimillion investments that sometimes will take years from start to finish. People need to buy into the digital transformation of their businesses.”
That sheer scale also means there is little room for smaller firms, he added. “Projects are very complex and require lots of people over a long period of time, and therefore smaller businesses are not able to fulfil that need, at least at the level we operate.”
Farnborough, England-based One Beyond, then-named DCSL Software, agreed an investment from QPE in December 2020. The size was only disclosed as double digit. London-based QPE can invest up to £60 million although it typically invests £10 million to £20 million.
QPE focuses on lower mid-market companies in the education, health and pharma, and tech services sectors. It focuses on firms in the UK and Ireland with enterprise values of £15 million to £80 million. The One Beyond investments came from its £202 million QPE Fund I.