Silverfleet acquires Microgen Financial Systems

Blog: Solitaire Consulting Blog

Silverfleet Capital, the leading Pan-European private equity firm, announced completion of the deal to acquire Microgen Financial Systems Limited (MFS) on Monday 1st July 2019. The press release from Silverfleet can be viewed here.

This follows the news back in March when Microgen plc (now renamed to Aptitude Software Group plc) stated their intention to demerge the financial systems business and list it separately on AIM. This resulted in interest from several private equity firms, with Silverfleet successful in their bid to secure MFS for a cash consideration of over £51million.

I recently attended a Microgen customer event and the management team were speaking very confidently about the future under their new owners. They were quick to draw the distinction between PE investment in technology businesses vs investment in trust and fund businesses. The latter is often characterised by increases in fees which Microgen were distancing themselves from. They welcomed the investment that Silverfleet have made in the business and their vision to help MFS become the market leader in the trust and corporate services software sector.

My personal view is the acquisition and associated investment can only be good for the industry. The trust and corporate services software space has become somewhat stagnated in recent years and is ideally suited for some disruption. Whether Microgen can deliver this disruption remains to be seen.

The feedback from Microgen customers I have spoken to has largely been positive or neutral. However, a few are concerned about potential increases in annual licence fees. There is also a common view that investment in 5Series must continue or increase to keep pace with the rapid changes in regulation and customer requirements.

The new CEO of MFS is Robert Browning. Robert was previously COO, joining Microgen just under 2 years ago. Prior to this he held several senior management roles in financial software businesses. Robert has a strong management team working with him, the majority of whom are relatively new to the company.

The Microgen of old had a reputation on focusing on selling software without considering the customer experience. This has changed recently and it will be interesting to see if this emphasis on putting the customer first will continue – I certainly hope so.

I will be keeping an eye on the market for any significant developments at Microgen, and its key competitors, as well as anything of note coming out of the smaller software businesses, or any new challengers that emerge. Please follow this blog for updates, or contact me directly if you have any specific questions.

You can read more about my thoughts on the other players in this market in a previous article I wrote here.

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