CRN Fast50 firm and managed service provider Virtual IT Group (VITG) has more acquisitions in mind after signed an agreement to secure investment from global mid-market private equity firm The Riverside Company.
The size of the invesment has not been disclosed.
VITG MD and chairman Christian Pacheco told CRN Australia that VITG selected Riverside due to the US firm’s “experience in taking businesses from 100 million revenue to three, four or 500 million revenue…”
Riverside “not only the financial backing but they had the experience in the managed services space, so they really ticked all the boxes for us,” he said.
In a statement, Pacheco described Riverside as “like-minded partner who embraces our culture of collaboration and fostering lasting relationships, particularly in the M&A context where VITG has built a strong reputation in acquiring founder-led businesses.”
“As a leading player in a consolidating IT services space, we are excited about what we can achieve together going forward – we are just getting started!”
Headquartered in New York, Riverside offers private equity, flexible capital and private credit for businesses and claims to have made over 1,000 investments since its founding in 1988.
Riverside Australia invests in Australian and New Zealand-based companies with last twelve months earnings before interest, tax, depreciation, and amortisation of up to AU$25 million.
“Investing in high quality technology-oriented B2B businesses like VITG has been a priority for Riverside over many years,” stated Nicholas Pejnovic, principal at Riverside.
“We bring access to a global network of experts to support the growth of these companies, which is one unique factor that Riverside offers its portfolio companies. We’re excited about Riverside’s investment in VITG and looking forward to partnering with such a high-calibre and ambitious management team.”
VITG’s ambition is to at least triple the size of the company in the next 12 to 24 months and grow from 250 staff to over 600 within the next year, Pacheco told CRN Australia.
“The first phase is hardening our existing platform to allow for significant scale and growth…we’ve invested heavily in automation and it’s just taking the automation to the next level so that we can double or triple in size successfully,” Pacheco said.
VITG will look to make more acquisitions, with a focus on cybersecurity, cloud and managed services firms.
“In terms of future M&A activity, we’re looking at it more organically at the moment and there’s a potential to engage with a buyside on it as well,” Pacheco said.
Riverside Principals Nicholas Pejnovic and Kevin Xu worked together alongside Vice President Jenny Guo and Analyst Dominique Ling on the deal for Riverside.
Riverside was advised by Ad Astra Corporate Advisory and Herbert Smith Freehills. VITG was advised by Allier Capital and KPMG Law.
Overseas interest
Today’s VITG announcement follows investment in or acquisition of several Australian and New Zealand MSPs by US firms this year.
In January, US holding company Evergreen Services Group made its first foray into ANZ with the acquisition of Auckland-headquartered MSP Lancom Technology. It made its second regional acquisition of Canberra MSP Centrered in March.
In February 2024, Evergreen’s VP of M&A Sydney Hockett told CRN Australia why the firm is targeting MSPs. “We love the predictability of the [MSP] business and how locked in that revenue is. I think another component is just how mission critical the services are,” she said.
In April, the CEO of Sydney-based IT advisory firm 360 Consulting, Ryan Spillane, told CRN Australia “the multiples applied to Australian (and less the case New Zealand) IT/MSP/TSP companies has been generally a lot less than the international markets, so it really was just a matter of time before the companies wanted to enter the market.”
