Hamburg-based private equity firm GENUI approached the founders of Aagon two years before closing a deal to buy a majority stake, investment manager Boris Klenk told Mergermarket.

The founders of the Soest-based software solution provider for client management, Wilko Frenzel and Sascha Häckel, were interested in the opportunity, but wanted to explore offers from other potential bidders as well, Klenk said, adding that several financial and strategic buyers participated in the process.

GENUI, founded in 2014 by investment experts and former entrepreneurs, focuses on energy transition, healthcare, and digitalization. Around 30 entrepreneurs contribute expertise and capital.

As part of the deal, GENUI asked Klaus Weinmann, founder of information technology (IT) player CANCOM [ETR: COK] to chair Aagon’s advisory board and support the management as an advisor.

“Weinmann brings deep expertise in partner management and will support the management in finding the right IT implementation partners,” says Klenk. Frenzel and Häckel retain a stake in the company and will continue to manage Aagon’s business after the takeover.

Klenk said that the presence of CANCOM’s founder, who is also CEO of Primepulse, helped GENUI to win. “I believe we prevailed due to Klaus Weinmann’s expertise, our long-standing, trust-based collaboration and our clear growth strategy.”

GENUI plans to support the management in expanding Aagon’s international presence through distribution and implementation partners rather than acquisitions, Klenk said. “Management’s focus is on expanding the partner network.”

In the short term, the company is targeting Austria and Switzerland, with wider expansion into neighbouring European countries planned in the longer term, Klenk said.

Aagon primarily serves small and medium-sized enterprises (SMEs), a market that still holds significant growth potential, Klenk said. “Additionally, regulatory pressure like NIS2 is driving demand,” Klenk added.

The European NIS2 Directive establishes a unified legal framework for supply chain security, vulnerability management, and cybersecurity education and awareness, according to the European Union (EU). The new directive was expanded to sectors such as social platforms, water and waste management, manufacturing of critical products, postal and courier services and public administration.

Medium-sized companies, defined as those with 50-249 employees or a turnover of EUR 10-50m, and larger companies, defined as those with 250 employees or a turnover of at least EUR 50m, are affected by the new policy.

Beyond regional expansion, Aagon’s management also sees potential for smaller opportunistic acquisitions, according to Klenk. “Acquisitions in the networking monitoring and visibility sector as well as security sector are possible,” he said, adding that the firm is looking for companies in Germany, Austria and Switzerland (DACH) with revenues of less than EUR 10m.

However, a buy-and-build strategy is not suitable for Aagon according to Klenk, adding that it is too complex to extract individual unified endpoint management (UEM) solutions. Comparable companies include Matrix42, Raynet and Baramundi, as well as Microsoft’s [NASDAQ: MSFT] Intune offering, he added.

GENUI prefers enterprise companies that offer targeted solutions, Klenk said. “Aagon’s solution does not require broad marketing efforts, but instead allows them to approach customers directly,” he added.

Aagon was founded in 1992. The company offers solutions for the daily challenges of IT departments, such as the central management of devices and software licenses, the recording of faults or in the area of cybersecurity. “The firm’s successful security software and customer centricity offer a lot of potential for scaling the business”, Klenk said.

GENUI’s investment philosophy is based on companies with sustainable and profitable growth, Klenk said.

“Aagon has a low churn rate and a mission-critical product that is deeply embedded in customer structures and therefore difficult to replace,” he added.

GENUI did not disclose the financial terms of the transaction. “The company has a double-digit annual revenue growth and a double-digit EBITDA margin,” Klenk said. In 2022, the company’s revenues grew by 8% to nearly EUR 15m, with an EBIT margin of 18.5%, according to the latest listed report.