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Develco Products welcomes strategic buyer approaches, targets full exit in 24-36 months – CEO

Develco Products, a Danish developer of IoT software and hardware for dwellings and care homes, will consider approaches from strategic buyers as it looks to scale its offering, CEO Karsten Ries told Mergermarket.

Develco Products presently has EUR 15m in revenues, with much of it being put back into product development and sales, the CEO said. Currently, the business does not have a need for capital, but additional funds are necessary if the business is to scale properly, he said.

The company's shareholders, including an unnamed Swiss individual and Ries, targets a full sale in the next 24-36 months, he said. Therefore, it is keen to hear from strategics that could potentially add Develco Products’ hardware solutions and proprietary cloud services to an existing offering, he said. A sale to a financial buyer with an existing IoT platform could also be considered, he added.

With around DKK 65m (EUR 8.7m) invested in the business so far, the majority from the Swiss investor, an exit in two years is appropriate if the business is to scale further, the CEO said, adding that he holds a minority stake.

Develco has had “a few” inbound approaches and conversations in the past, the CEO said, adding that the business will consider hiring legal advisors once exit negotiations commence.

Specialising in creating white-label gateways and sensors for other providers to launch their own IoT systems of gateways, sensors, alarms and relays, Develco Products offers a full-stack solution to providers, according to the CEO.

Established in 2007, Develco Products spent eight years building hardware, new protocols, and a proprietary cloud service for IoT solutions. The platform allows its hardware to use a more efficient network, as well as allowing clients to use third-party hardware on the local network.

Develco Products’ clients are primarily solutions providers in the home care, alarm, and security space, often municipal and institutional organisations, the CEO said, adding that it is mostly active in the UK, Norway, Benelux, Germany, Italy, Spain, and North America.

Develco Products is particularly focused on serving clients that want to offer a full solution related to supplying gateways, sensors, alarms and relays to larger residential dwellings and care homes.

A typical sale is worth around DKK 15m-DKK 20m, with some clients purchasing services for around DKK 40m, he said, adding that the number of clients grows roughly 50% a year. The business is also looking into boosting the recurring part of its revenue stream via its software offering, he said.